Since insurance regulator Irdai has allowed general insurance companies to design new and customized products for housing, micro and small enterprises for fire and related hazards, this new guideline will give policyholders more options to choose products. And, competition among insurers over product features is expected to bring innovation to the industry.
According to insurance experts, the price of new and tailor-made products and coverage extensions is expected to continue to be more competitive in order to gain greater market share in fire and associate hazard insurance, a lucrative line of business.
In an effort to increase insurance penetration and give policyholders a wider choice, Irdai May 12 allows general insurers to design new and customized products for housing, for small and micro enterprises for fire and related hazards. Currently, insurance companies offer standard fire and special hazard insurance policies, which provide insurance cover for fires, thunderstorms, storms, explosions, floods, earthquakes, landslides, cyclones, riots, strikes and physical damage, destruction and loss of insured property. Terrorism, among others.
“Irdai’s new guidelines allow insurers to design new and customized insurance products for fire and related hazards, a very welcome step for the benefit of policyholders. The freedom of insurers to sell customized products and allowing policyholders to choose more options will greatly benefit consumers as competition for product features will bring innovation, ”Sanjay Kedia, Country Head and CEO, Marsh India Insurance Brokers, told FE.
According to Kedia, it has been observed globally that price, coverage and service competition help customers and lead to rapid growth in the market. “This is the right move to increase insurance penetration in the country,” he said, adding that leading insurance brokers hope regulators will soon begin allowing insurance companies and intermediaries to bundle insurance companies and intermediaries to expand real solutions for customers and not just insurance products. . . “The point is that Allied Services of Roadside Assistance for Motor Insurance is already allowed to be sold with insurance,” he noted.
The insurance regulator allowed the freedom of price i.e.; D-Tariff in 2008-09, which allowed price competition in the general insurance industry. Previously, prices of almost all general insurance products were determined by the Tariff Advisory Committee, under the supervision of IRDA. Further, in fiscal year 2021-22, the regulator decided to allow insurers to file three insurance policies for residential risk, small risk and small and medium risk and allowed insurance companies to set premium rates based on their own experience. And the quality of the underlying risk. This has resulted in favorable pricing for policyholders.
“In our view, the trend will continue and insurers will continue to acquire new product pricing and coverage extensions to gain market share in this (fire and related hazard) profitable line of business more competitively,” said Kedia’s pricing. New and customized fire and allied hazard insurance.
According to him, reinsurance companies should be allowed to innovate on their behalf in terms of coverage and reinsurance can contribute by providing capital and enhancing product knowledge efficiency and aligning their reinsurance support by allowing insurers to reduce risk. “They can contribute further by offering their global expertise in this area and helping insurers develop more innovative covers,” Kedia added.
The Irdai business has allowed general insurers to design and file alternative products to cover fire and related hazards, considering the growing demand for new covers in the fire line. “Such alternative products may be standard product variants and may include already approved add-ons as part of the base product or remove an existing provision,” the regulator said.
However, the definitions and terms used in standard products will be reference points for those terms when used in alternative products as well. And, the price of new products will be consistent with the risks involved.
For the country’s non-life insurance industry, gross premiums written by insurance companies under fire insurance stood at `21,545.25 crore in the last financial year, an increase of 7.02% year on year.