Micro Insurance Gains Strength

With the recent announcement made by IRDAI that a Committee has been set up to come up with measures for promoting Microinsurance, Insurance Companies have the opportunity to expand their business through wider reach and simpler products. The role of digitisation is only getting more and more significant with such initiatives where Insurance Companies are already enhancing their digital capabilities rampantly.

The Committee has already suggested that Micro Insurance Companies (Cooperatives and Mutuals) should be allowed to act as Composite Insurers for the distribution of life and non life micro insurance products under a single entity name.

This initiative is also being viewed as urgent in the current context of the pandemic COVID-19 when millions of Indians have lost their livelihoods and those especially in the informal and unstructured sectors are on a threat of falling back in to the poverty pit.

A recent suggestion made by the Committee states that Standalone Micro Insurance Companies should have a lowered Capital requirement of INR 200 Mn from the current requirement of INR 1 Bn which could help accelerate the process and growth in this segment and substantially increase the insurance penetration in the country.