As per the suggestions of the committee, simplification of product filing guidelines will empower the insurance industry with adequate compensatory control mechanisms.
The recommendations include reformation of guidelines on product filing procedures for all Health & Non-Life Insurance by expanding the scope for “Use & File Procedures” for all categories of products and add-ons or riders including their modification or revision.
The committee has also asked the authority to review the prevailing set of regulatory prescription and make necessary modifications to ease the industry from the pricing controls and grant desired freedom.
Amongst other things, it is also recommended that customization of policy wordings be allowed for large risks and permit making variations in certain identified sections of Indian Motor Tariff.
To foster insurance popularity
To increase the popularity of Insurance products in India, the committee has proposed to grant the ability to offer non-insurance services to the customers which are related to and in link to the underlying insurance contract in exchange for a fee.
“Insurance companies may be permitted to provide risk management and value added services,” it added.
Other suggestions include, allowing insurers to offer multiple products under single proposal form, single policy, single renewal with option to add/remove products as per customers convenience.
Further, the ability to transfer the synergy benefits back to the customer by way of discounts on their insurance premiums will help increase the traction.
Review of Regulatory Sandbox
In order to simplify the process, it is recommended that, once an experiment is successful in the sandbox, the applicant should adopt the proposal on a Use and File basis for non-life products where automatic allotment of UIN takes place once the documents are uploaded on the BAP Product Module.
The extant regulatory prescriptions should also be modified gradually so that others can also leverage the benefits of such innovations. “Gradual regulatory changes as and when required, would retain policyholder confidence, and minimize business risk,” it added.
Accessibility of standard products at grassroot level
The working group recommends creation of standard products which could consider Bharat Sookshma Udyog Suraksha (BSUS) as a reference for small traders and small shopkeepers.
“This would make insurance relevant to these sections of society and also make it affordable for them. Linking these to several localized government schemes would increase its popularity and take-up rates,” the report added.
It further states that a customized standard product can be made as a variant of Bharat Griha Raksha (BGR) for small house owners.
This can help in ensuring protection with affordability and also will take up the insured loss % as compared to economic loss % in event of a catastrophe.
“The funding of this can be linked to an allocation from NDRF (National Disaster Relief Fund). This will result in better utilization of the fund and transfer appropriate risk to the insurance companies.” it said.
A variant can also be made to Pradhan Mantri Suraksha Bima to include benefit covers like hospital cash etc. to help support the policyholders from lost income during the period of hospitalization, it added.