Here’s good news for customers who want to buy an insurance policy, but are not able to do so due to lack of funds. The Insurance Regulatory and Development Authority of India (IRDAI) has announced that it is planning to bring out discussion papers on premium funding by banks for the non-life sector in particular.
If industry experts are to be believed, this measure will increase the insurance penetration of general insurance in specially the semi-urban and rural parts of the country. At present, the premium for general insurance products can only be paid annually, wherein the customer pays a lump sum amount for a policy period.
On the other hand, premiums in life insurance can also be paid half-yearly, monthly or quarterly. The premium financing will help customers pay the premium in installments, along with contributing towards the overall growth of the industry, especially health insurance, since premiums are higher compared to other general insurance products.
“All over world, if a person wants to buy insurance and does not have money, the premium is funded by banks and investors can pay back in installments. This is more for non-life insurance products, as they cannot be taken in installments. So, we are planning to come out with a discussion paper and hope to come out with some regulations in one month,” said Nilesh Sathe, Member-Life, IRDAI.