Indian Insurance regulator IRDA has allowed owners of kirana shops, medical stores, petrol pumps, PCOs & fair price shops to sell micro-insurance products in rural areas.
IRDA has also allowed regional rural banks, rural & urban cooperative banks, district cooperative banks, primary agriculture societies and cooperative societies to act as micro insurance agents in rural areas in an effort to increase insurance penetration particularly in remote areas and to cover poor families under insurance cover.
Micro insurance schemes are designed for the lower income population. These policies aim to cover risk of poor families from illness, injury or / death. As the coverage value is lower than a usual insurance plan, the insured people pay smaller premiums.
However, few financial planners feel that allowing kirana shops, medical stores, petrol pumps, PCOs and fair price shops to sell micro-insurance products may lead to instances of mis-selling.
Mr. Pankaj Mathpal, Managing Director, Optima Money Managers said, ''The move may cause mis-selling & give rise to orphan policies. Allowing a Kirana Shop owner to sell micro-insurance products comes across as a very unprofessional way to improve insurance penetration in rural areas. Instead, IRDA should allow educated unemployed people in rural areas to act as micro-insurance agents."
'These rural unemployed youths have greater potential than owners of kirana shops & medical stores as they will work professionally. Also, insurance companies should provide some fixed remuneration to these agents initially in addition to sales based incentives which could deter mis-selling” Mr. Pankaj Mathpal also said.
Mr. Yognis Sabnis, Mumbai based advisor also echoes the same thought. He said that only trained & enthusiastic professionals could sell insurance products & allowing owners of kirana and medical stores to sell insurance products may lead to mis-selling.
However, he praised the IRDA’s decision to allow cooperative and regional rural banks to sell micro-insurance products.
However, Mr. G.A. Agarwal, CEO, Future General Life Insurance said,''The move will help the industry grow. The chances of mis-selling are very low as there are only 2 to 3 schemes under the micro insurance basket. A local seller could better understand the need of rural people"
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