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Model Insurance Villages

Model Insurance Villages

CONTEXT:

  • Insurance Regulatory and Development Authority of India (IRDAI) has come out with the concept of model insurance villages to cover the entire population in Village areas.

Indian Insurance Industry Overview & Market Development Analysis

Model Insurance Villages

  • Objective: 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.

  • Need: At a time when the Covid pandemic is raging across the country

  • Financial support: With the financial support of various institutions like NABARD and CSR funds.

  • The concept 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.

  • Choice of villages: It is to be made carefully, considering the various relevant aspects and parameters in order to implement the concept successfully for a period of three to five years.

  • Eligible Insurance firms: Every general insurance company and reinsurance company accepting general insurance business and having office in India needs to be involved for piloting the concept.

INSURERS OFFERING IN MIV:

  • Weather index products or hybrid products combining weather index and indemnity-based insurance protection for various crops that remain uncovered under PM Fasal Bima Yojana (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

  • Even states can be offered macro insurance covers based on pre-defined parametric weather indexes covering large complex risks arising out of natural catastrophes affecting the agriculture ecosystem and rural economy.

Challenges:

  • Benefits visibility: The efforts in selected villages need to be continued for a minimum of 3 to 5 years so as to make insurance benefits visible to the community.

  • Affordable premium: In order to make the premium affordable, financial support needs to be explored through Nabard, other institutions, CSR funds, government support and support from re-insurance companies.

  • Target Achievement: This is to ensure that families and their property, crops get cover and the entire village community participate in the initiative.

Insurance Penetration and FDI Limit:

  • Economic Survey 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%.

Insurance Regulatory and Development Authority of India (IRDAI):

  • It is an autonomous, statutory body established under Insurance Regulatory and Development Authority Act, 1999.

  • On recommendations of the Malhotra Committee report, in 1999

  • It is an apex statutory body that regulates and develops insurance industry in India.

  • HQ: Hyderabad, Telangana

  • Functions:

    • Protect the rights of insurance policy holders.

    • Provide registration certification to life insurance companies

    • Renew, modify, cancel or suspend this registration certificate as and when appropriate; promote efficiency in conduct

    • of insurance business

    • Promote and regulate professional organisations connected with insurance and reinsurance business; regulate

    • investment of funds by insurance companies

    • Adjudication of disputes between insurers and intermediaries or insurance intermediaries

SOURCE: Indian Express and Times of India