soon you will be able to customize fire insurance policy for your home, small business

You may soon be able to take out a tailor-made insurance policy against fire and related risks. These will be available with the existing set of standard fire and property insurance products.

India’s Insurance Regulatory and Development Authority (Irdai) on Thursday authorized general insurers to design new customized products for homes and micro and small businesses against fire and related risks. This will be effective June 1, 2022.

This decision would allow insurance companies to expand the coverage already provided in standard fire and property insurance products by offering innovative add-ons or modifying existing provisions to meet the needs of policyholders in terms of suitability and security. affordability.

“In its ongoing efforts to increase insurance penetration and provide greater choice to policyholders, IRDAI has enabled insurance companies to design new and customized products for homes, micro and small businesses against the ‘fire and related risks,’ the insurance regulator said in a circular dated May. 12, 2022.

Experts say these changes to fire and property insurance are very good because they give insurers considerable flexibility in determining premiums and developing new products. “Although standard products will continue to be available, many new options will also be offered to buyers. Insurers must now use their own risk assessment to set prices,” explains Kapil Mehta, co-founder of SecureNow, an aggregator of insurance.

The circular further stated that insurers should follow existing product filing guidelines for new alternative products. “These alternate products may be variations of the standard product and may include add-ons already approved as part of the base product or may remove an existing provision. However, the definitions and formulations of terms used in the standard product should be the point of reference for those terms when also used in the alternative products. Needless to add that the pricing of products must be proportionate to the risks involved,” the insurance regulator said.

The alternative products will help identify protection gaps in existing products and respond to changing market needs with the interests of policyholders in terms of suitability and affordability in mind, the circular says.

Existing standard policies will not be canceled for the purpose of offering new coverages, he added.

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Justin D. O'Neill