Business correspondents meet Irdai, seek consent to sell insurance products

The Business Correspondent Resource Council (BCRC) has made a pitch to the Insurance Regulatory and Development Authority of India (Irdai) that field agents be allowed to hawk insurance products. As of now, the business correspondents’ (BCs’) channel — introduced in 2007 — only offers last-mile banking services.

 

BCRC’s stance is that shocks from climate-related issues are affecting those at the bottom of the pyramid in a big way. It presents an opportunity to sell weather-indexed insurance: policies designed to trigger payouts (livelihood support) based on specific weather conditions, such as low rainfall, extreme heat conditions, and similar events. It is argued that such an approach will enable the vulnerable section of society to better withstand climate shocks, providing a critical safety net in times of environmental uncertainty.

 

It may be recalled that Irdai is pushing the Bima Trinity — Bima Vistaar, Bima Vahak, and Bima Sugam. The BC network, over 500,000 strong with a footprint across the country, can play a role, even as offering insurance bolsters the earning capacity of field agents.

 

It was also pointed out that complementing the BC channel will be the 75 digital banking units (DBUs) set up by the Reserve Bank of India from April 2022. DBUs are brick-and-mortar outlets equipped with infrastructure to execute banking functions such as opening accounts, accessing government schemes, and making transactions digitally. By mid-December 2023, there were 96 DBUs. The short point is that insurance can be cross-sold on the BC and DBU networks.

 

On climate change, the latest report from the Copernicus Climate Change Service states that 2024 will be the warmest year since 1940. This October was also estimated to be the second-warmest globally (after October 2023), with average temperatures 1.65 degrees Celsius above the pre-industrial level, also marking it the fifteenth month in a 16-month period where average temperatures were above the 1.5-degree Celsius threshold set by the Paris Agreement.

 

The latest move by BCRC on BCs being allowed to sell insurance must be read along with its writing to the Ministry of Finance for an upward revision in the commission paid to agents. Plus, related issues like the setting up of an annual pricing review committee and a relook at the penalties imposed by banks on BCs.

 

BCRC is for a 30-basis point hike in the commission paid by banks for cash withdrawals, cash deposits, money transfers, Aadhaar-enabled Payment System transactions, and other banking and financial businesses. 

Anchors of protection & profit: Business correspondents

 

> Sell weather-indexed and standard insurance products

> Empower the vulnerable to withstand climate shocks

> Leverage Irdai’s Bima Trinity and a 500,000-strong business correspondent network

> Boost earning potential with insurance offerings