Micro Insurance: A Tool for Financial Inclusion
Thursday, December 11, 2014
Financial inclusion is now one of the most talked about agendas towards holistic development of the country. With the thrust towards financial inclusion by the Narendra Modi government to achieve all round growth of society, micro insurance is poised to play an important role in it.
Micro insurance is essential to ensure financial support for the large chunk of rural and urban poor population in the country, especially when it comes to insuring their lives or property for a small quantum of premium.
According to Irda micro-insurance regulations announced in 2005, micro insurance can be a life or general insurance policy with a sum assured of Rs 50,000 or less and the average ticket size ranges between Rs 500 and Rs 1000. But in the draft of modified Irda regulations for micro life insurance, the maximum sum assured limit has been raised to Rs 2,00,000 and maximum premium has been capped at Rs 6,000.
While these products offer coverage to low income households in the rural areas, it helps insurers increase penetration in the rural markets. Irda has also set a target for insurers to generate a certain portion of their business from the rural markets by selling micro-insurance products.