Regulator Irdai has proposed changes in fire and allied policy covers to increase insurance penetration for dwellings, offices, hotels and shops that suffer big economic losses due to natural calamities.
Recent catastrophic events such as floods in northern parts of India and in Chennai such as Hud Hud Cyclone have revealed that economic losses are much higher than insured losses, said Insurance Regulator and Development Authority of India (Irdai).
"There is a need to increase the penetration of fire and allied perils insurance, in particular for dwellings, offices, hotels, shops as well as for micro, small and medium enterprises," it said while setting up a working group to examine the current insurance product structure.
The product structure for cover against fire and allied perils that is currently being followed is that of the erstwhile fire tariff.
The seven-member panel headed by Anurag Rastogi of HDFC Ergo General Insurance Company has been asked to submit its report within 12 weeks.
It will examine the current product structure under Standard Fire and Special Perils Policy (SFSP) and study the need and scope for changes in the current product structure.
The group has been asked to suggest standard and simple policy wordings, add-on covers, clauses, endorsements to be adopted by the general insurers that adds value to policyholders.
Another task of the panel is to make recommendations with regard to relevant regulatory framework, including assessment of risk, pricing, reserving, accounting etc for both long-term and short-term policies.