LIC, PSU insurers team up for micro insurance foray

Life Insurance Corporation of India (LIC) and the four public sector general insurance companies "" New India Assurance, United India Insurance, Oriental Insurance and National Insurance "" are joining hands to offer packaged micro insurance products for the poor.

The government-owned insurance companies will utilise the reach of non-government organisations (NGOs) and micro-finance institutions to foray into micro insurance.

The life and general insurers met representatives of 20 NGOs, including Federation of SEWA, Sadhan, SKS and Dhan Foundation and 40 micro finance institutions.

"The companies are ready with the products and will be filing it with Insurance Regulatory Development Authority of India by the end of this month. A meeting to discuss the products, pricing and distribution of the products took place in Bangalore on August 4 where officials of the public sector companies met with representatives of 20 NGOs like Federation of SEWA (an NGO with 1.75 lakh members), Sadhan,

SKS, Dhan Foundation and 40 Micro Finance institutions. Since LIC follows zonal concept, it plans to tie-up with New India Assurance for better reach in western zone, with National Insurance for eastern zone, United India Insurance and Oriental Insurance for Northern zone.

The insurance companies also hope to rope in 'Confederation of NGOs of Rural India (an association of 2,000 NGOs) headquartered in Delhi for selling micro insurance products.

"We felt that one product is not feasible on all India basis. So we asked NGOs to form a core group and come back with data on diseases and needs for age-wise covers," an insurance official said.

The micro insurance products will be a package policy of life and general insurance covers. The general insurance products will vary according to general insurer involved.

The policies would be sold along with a life cover from LIC varying from minimum sum assured of Rs 5,000 to Rs 30,000.

The general insurance counterparts will give covers for health, personal accident and dwellings, cattle, plantation, fisheries, livestock and weather. General insurance covers would be sold on an annual basis while life cover for longer periods.

Micro insurance market is estimated at over Rs 1,000 crore annually, but is untapped as yet.

As per the scheme being worked out by the public sector insurers, NGOs would act as microinsurance agents and would be empowered to collect premium.