- The Insurance Regulatory and Development Authority of India (IRDAI) has mooted the concept of ‘Model Insurance Village (MIV)’ to boost insurance penetration in rural areas.
- According to the Economic Survey for 2020-21, India’s insurance penetration, which was at 2.71% in 2001, has steadily increased to 3.76% in 2019, but stayed much below the global average of 7.23%.
- Recently, the Parliament has passed the Insurance Amendment Bill 2021 to increase the foreign direct investment (FDI) limit in the insurance sector to 74% from 49%.
- The idea is to offer comprehensive insurance protection to all the major insurable risks that villagers are exposed to and make available covers at affordable or subsidised cost.
- In order to make the premium affordable, financial support needs to be explored through NABARD, other institutions, CSR (Corporate Social Responsibility) funds, government support and support from reinsurance companies.
- It may be implemented in a minimum of 500 villages in different districts of the country in the first year and increased to 1,000 villages in the subsequent two years.
- Every general insurance company and reinsurance company accepting general insurance business and having offices in India needs to be involved for piloting the concept.
Possible Offerings under MIV:
- Weather Index product or hybrid product combining weather index and indemnity-based insurance protection for various crops that remains uncovered under Pradhan Mantri Fasal Bima Yojna (PMFBY).
- Flexible Farm Insurance Package Policies targeting comprehensive needs of crops, livestock, farmer, farm implements.
- Separate products for high value agriculture, contract farming and corporate farming community as their needs are different.
- States can be offered macro insurance covers based on predefined parametric weather indexes covering large complex risks arising out of natural catastrophes affecting the agriculture ecosystem and rural economy.
Lack of awareness, limited choice of insurance products, absence of people-friendly and transparent claim settlement mechanisms, and weak network of insurance firms, are some of the issues and challenges in advancing growth of rural insurance business.
Insurance Regulatory and Development Authority of India
- Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry.
- The IRDA was incorporated as a statutory body in April 2000.
- The key objectives of the IRDA include the promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums while ensuring the financial security of the insurance market.
- It is headquartered in Hyderabad.
SOURCE: THE HINDU , THE ECONOMIC TIMES ,MINT