Bima Vistaar

• 01 May 2024

Source: IE

Why in News?

Recently, the Insurance Regulatory and Development Authority of India (IRDAI) has proposed to price Bima Vistaar, its ambitious all-in-one affordable insurance mass product aimed at the rural areas of the country, at Rs 1,500 per policy.

What is Bima Vistaar?

• About:
  • Bima Vistar, which is part of the Bima Trinity. The first-of-its-kind all-in-one affordable insurance product, Bima Vistaar will offer life, health and property cover.
    • The product has been designed to provide a basic social safety net cover with combined features of life, health, personal accident and property insurance.
• Key Features:
  • The product includes Life cover premium of Rs 820, Health cover Rs 500, Personal accident cover at Rs 100, and Property cover at Rs 80.
  • If taken for the entire family on a floater basis, the policy will cost Rs 2,420, with an additional Rs 900 charged for the rest of the family members.
  • The sum assured for life, personal accident, and property covers is Rs 2 lakh each, while the health cover (hospital cash) offers a sum assured of Rs 500 for 10 days, with a maximum amount of Rs 5,000 available without producing bills or documents.
  • Agents selling Bima Vistaar policies stand to earn a commission of 10%, incentivising wider distribution and adoption of the product.
• Benefits for Broader Insurance Landscape in India:
  • Bima Vistaar is expected to provide a reliable insurance solution at a reasonable cost, thereby promoting financial inclusion.
  • Bima Vistaar policy underscores its importance in safeguarding individuals and families against various risks and uncertainties.
  • It is considered a mass product for increasing insurance penetration in the country, it is expected that, unlike micro insurance products, it will generate a large sales volume.
• Future Prospects:
  • IRDAI, along with the General Insurance Council (GIC) and Life Insurance Council (LIC), is working towards creating a "Bima Trinity" - Bima Sugam (digital platform), Bima Vistaar (product), and Bima Vahak (women-centric distribution channel) - to effectively distribute and promote these products.
    • The competitive pricing and comprehensive coverage of Bima Vistaar are expected to make it a viable and sustainable solution in the long run.

Insurance Regulatory and Development Authority of India (IRDAI)

• The (IRDAI) is an autonomous and statutory body formed under the Insurance Regulatory and Development Authority Act, 1999 (IRDA Act, 1999). It is responsible for managing and regulating the insurance and reinsurance industry in India.
• It is a 10-member body- a chairman, five full-time members and four part-time members. Headquartered in Hyderabad.
• The Role of IRDAI:
• It has to protect the interests of insurance policyholders and ensure that they are treated in a just manner. It also has to monitor policy issuers to ensure that the common man’s interests are not subverted.

History of India’s Insurance Industry

• In I950, the Government of India nationalised India’s insurance industry and established the Life Insurance Corporation (LIC) of India.
• In the 1990s, the government decided to open up the insurance sector to private players. A committee was set up to propose reforms and the IRDAI was formed.
• In 2000, when the market was opened up, foreign firms were allowed to buy up to 26% stake in Indian insurance companies.
  • Later, foreign direct investment in the insurance sector was capped at 49%.
• In the financial year 2022-23 (FY23), India's overall insurance penetration was down at 4% from the level of 4.2% in FY22, according to a Swiss Re Sigma report. This is much below the global insurance penetration of 6.8%.
  • In FY23, the insurance density in India increased from USD 91 in FY22 to USD 92.
    • Insurance density is the ratio of insurance premiums collected by insurance companies to the total population of a country, usually expressed in US dollars.

Read more: No Age Bar for Health Insurance in India