You may soon be able to buy a customised insurance policy against fire and allied perils. These will be available along with the existing set of standard fire and property insurance products.
The Insurance Regulatory and Development Authority of India (Irdai) on Thursday allowed general insurers to design new and customised products for dwellings and micro and small enterprises against fire and allied perils. This will be effective June 1, 2022.
The move would enable the insurance companies to broaden the coverage already provided in the standard fire and property insurance products by offering innovative add-ons or changing the existing provisions to meet the needs of the policyholders in terms of suitability and affordability.
“In its continuous endeavour to increase insurance penetration and provide wider choice to policyholders, IRDAI has allowed insurance companies to design new and customised products for dwellings, micro and small enterprises for fire and allied perils,” the insurance regulator said in a circular dated May 12, 2022.
Experts say these changes in fire and property insurance are very good because they give considerable flexibility to insurers to determine premiums and develop new products. “While standard products will continue to be available there will be many new options as well for buyers. Insurers must now use their own assessment of risk to set prices," says Kapil Mehta, co-founder, SecureNow, an insurance aggregator.
The circular further said that the insurers should follow the extant product filing guidelines for the new alternative products. “Such alternative products may be variations of the standard product and may include already approved add-ons as part of the base product or may delete an existing provision. However, the definitions and wordings of terms used in the standard product shall be the reference point for those terms when used in the alternative products as well. Needless to add, the pricing of the products shall be commensurate to the risks involved,” the insurance regulator said.
The alternative products will help identify protection gaps in the existing products and address the changing needs of market keeping in mind the interests of policyholders in terms of suitability and affordability, said the circular.
The standard policies in force shall not be cancelled for the purpose of offering new covers, it added.