In 2013, the Insurance Regulatory & Development Authority (Irda) allowed insurance companies to use common services centres (CSCs) as a distribution network to sell life and general insurance policies in rural areas. However, a year down the line, this channel remains untapped, as insurers are yet to launch specific products to sell through this channel and there is a lack of trained personnel to sell these products.
â€śInsurance agents need to undergo specific training. The CSC channels have just begun operations and it is difficult to get personnel who are aware of insurance products. Hence, insurance companies are not in a rush to tie-up,â€ť said the head of distribution of private life insurance firm.
CSCs, set up under the National e-Governance Plan, seek to facilitate a platform for government and private-sector organisations to take the benefits of information and communication tools to rural India.
On September 12, 2013, Irda gave e-Governance Services India Limited, a CSC, the licence to operate as an authorised intermediary to market specifically-approved insurance products and services.
According to Irda regulations, CSCs that want to sell insurance products should appoint rural authorised persons (RAPs), who have undergone 20 hours of theoretical training from a recognised institution and, subsequently, cleared an examination. This is because RAPs are supposed to assist customers in selecting policies according to their needs.
Irdaâ€™s licences to CSCs is valid for three years, after which these can be renewed for another three years.
Insurance companies wanting to sell through the CSC channel should file specific products, approved by Irda. According to the company executives, while basic general insurance products such as simple health plans and simple motor third-party plans can be offered through this channel, endowment and investment type products will be difficult to sell.
â€śWhile the regulator has made it clear there will be separate products for this channel, companies are still analysing with their actuaries which products would work for this market,â€ť said the head of actuary at a mid-sized life insurance company.
â€śThough the regulator has encouraged us to take advantage of this new distribution channel, we are going slow on this channel. We are yet to formally tie-up,â€ť said an official of a state-owned insurance company.
Insurers are also concerned about anti-money laundering norms, as CSCs will largely deal with cash. â€śBefore entering into any tie-ups, we need to be doubly sure of how the anti-money laundering practices are being standardised in the CSCs,â€ť said the chief financial officer of a private general insurance company.
According to Irdaâ€™s guidelines, these products cannot have a sum assured exceeding Rs 2 lakh (except motor insurance), per life or risk.
The Centre plans to roll out about 100,000 CSCs across the country, with a focus on rural areas. The CSCs will offer web-enabled e-governance services in rural areas. These can offer application forms, certificates, and utility payments such as electricity, telephone, and water bills.