The Insurance Regulatory and Development Authority of India (IRDAI), in a bid to widen the coverage of existing fire policies, has proposed changes in fire and allied covers. The regulator noted that recent natural calamities such as Chennai floods and Hud Hud cyclone had caused economic losses, which were much more than the insured losses. Therefore, the regulator has proposed that changes be made to increase insurance penetration for dwellings, offices, hotels, and shops, so that they remain covered against big economic losses arising out of natural disasters.
The current product structure that is followed for cover against fire and allied perils is the erstwhile All India Fire Tariff. Now, the IRDAI has set up a seven-member panel, which will look into the current product structure under Standard Fire and Special Perils Policy (SFSP), with a view to study the need and scope for changes. Not only that, it will also make recommendations for a more relevant regulatory framework, also including assessment of pricing, risk, reserving and accounting for short-term and even long-term policies.
The panel will also suggest standard and simple policy wordings, add-on covers, clauses, endorsements, and other elements, which will probably be implemented by general insurers in the future. All of these will serve to add further value to policyholders comprising of micro, small, and medium enterprises.
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