Why in News:

• A working group of insurance regulator IRDAI, revisited the structure of products providing cover to homes, offices, commercial establishments and MSMEs, has recommended many changes.

Details:

• Insurance Regulatory and Development Authority of India (IRDAI) said wordings and terms and conditions of the basic policy for fire and allied perils for all categories of risks are driven by the erstwhile All India Fire Tariff, 2001.
• IRDAI had set up the group in view of the huge gap between economic losses and insured losses, post catastrophic events, for homes, offices, commercial establishments and MSMEs.
• Noting that the protection needs of the insuring public for their assets against fire and allied risks are met by Standard Fire and Special Perils Policy (SFSP) the product structure remained, more or less, the same since the All India Fire Tariff revision in 1988
• Noting the product, created years ago, does not seem to be meeting the true protection needs of the insuring public, the group recommended introduction of three different versions of the product
• The first, and the simplest of the three with most relaxed terms, would be for homeowners while a slightly more refined version would be for micro commercial establishments having value at risk of up to ₹5 crore.
• A moderated version of the existing product is recommended for commercial risks having value at risk from ₹5 crore to ₹50 crore.
• The group said there has to be a system of default sum insured for all the dwellings such that the insured value is a reasonable estimation of the correct value of construction cost of the building.
• In case of a total loss, per square foot rate specified in the policy shall be sacrosanct and claim shall be paid after multiplying it with the actual area of the apartment

Insurance Regulatory and Development Authority of India

• Insurance Regulatory and Development Authority of India or the IRDAI is the apex body responsible for regulating and developing the insurance industry in India.
• It is an autonomous body. It was established by an act of Parliament known as the Insurance Regulatory and Development Authority Act, 1999.
• IRDAI is headquartered in Hyderabad in Telangana. The organization fought for an increase in the FDI limit in the insurance sector to 49% from the previous 26%. The FDI cap was hiked to 49% in July of 2014.
• Its primary purpose is to protect the rights of the policyholders in India. It gives the registration certificate to insurance companies in the country.
• It also engages in the renewal, modification, cancellation, etc. of this registration. It also creates regulations to protect policyholders’ interests in India.