Insurance companies can now sell their micro-insurance policies through agents and local organizations enabling them to reach a wider customer base, according to a Micro-Insurance Directive 2014 enforced by the Insurance Board (IB) last week.
Previously, there were no laws allowing insurers to sell insurance at the micro level. The IB said that the new directive would benefit the poor who had no access to insurance services.
The directive has also opened the door for insurers to work with NGOs, community-based organisations and cooperatives and enlist them as agents. “The insurers, based on the financial strength of the local organisations, can appoint them as agents to collect premiums as well as underwrite insurance policies for the poor,” said Shree Man Karki, director of the IB.
However, local organisations have been allowed to handle only a small portion of their business, he said. The regulator of the insurance sector said it had come up with the directive in a bid to extend micro-insurance facilities mainly to the poor.
The IB had planned to issue micro-insurance regulations last year, but its draft was dumped by the Cabinet. The directive was issued after the proposed regulation got nowhere, said Karki.
The new directive allows insurers to sell policies under seven different headings, five related to non-life and two related to life insurance.
Under household insurance at the micro level, insurers can sell policies with a maximum insurance coverage of Rs 200,000. The upper limit for health insurance has been fixed at Rs 35,000 for a family of five. Likewise, the limit for accident and livestock insurance has been fixed at Rs 150,000 each. The maximum crop insurance amount has been fixed at Rs 50,000.
The directive has also allowed insurers to sell term-life and endowment insurance policies worth Rs 150,000 and Rs 100,000 respectively. According to Karki, term-life and endowment insurance policies cover death due to accident or natural causes. “However, it does not cover suicide cases,” he added.
The IB’s step is expected to benefit the poor in particular by bringing them under the insurance net. “Due to the provision, people with low incomes can be secured against possible damage to their small business, health and fixed property besides agricultural products,” said Karki.
The government already provides a 75 percent subsidy on insurance premiums for crops and livestock. Karki said they were mulling extending the subsidy to the non-agricultural segment of micro-insurance too.
source: the kathmandu post,19 sept 2014
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