IRDAI asks general insurers to offer 3 standard products for fire, allied peril from April 1

The Insurance Regulatory and Development Authority of India (IRDAI) has asked general insurance companies to mandatorily offer three standard products covering risk of fire and allied perils from April 1. The regulator said the Standard Fire and Special Perils (SFSP) Policy will be replaced by the three standard products -- Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha. It shall be mandatorily offered by all general insurers carrying on fire and allied perils insurance business with effect from April 1, 2021.

Bharat Griha Raksha is meant for home building and home contents, while Bharat Sookshma Udyam Suraksha is for enterprises where the total value at risk is up to Rs 5 crore. The third product, Bharat Laghu Udyam Suraksha, is meant for enterprises where the total value at risk is more than Rs 5 crore and up to Rs 50 crore. The products have all been designed with policyholder-friendly features and are worded in simple language for the convenience of the general public.

The Bharat Griha Raksha policy will offer cover against a wide range of perils, like fire, natural catastrophes, impact damage of any kind, riot, strike, malicious damages, acts of terrorism, and bursting and overflowing of water tanks, among others. Besides offering coverage for the home building, the policy covers general home contents automatically (without any need for declaration of details) for 20 per cent of the sum insured for the building subject to a maximum of Rs 10 lakh. One can also opt for a higher sum insured for general contents by declaring the details.

Bharat Sooksma Udyam Suraksha and Bharat Laghu Udyam Suraksha policies will be useful for financial protection of micro, small and medium enterprises (MSMEs). Insurers would be permitted to file innovative add-ons (additional covers) over and above the basic cover, in-built cover, optional cover, if any, and standard add-ons that these retail products already offer. The regulator also said the process of bringing the Fire and Allied Perils Insurance business out of the ambit of the All India Fire Tariff, 2001, which began in 2006-07 and 2007-08 with de-tariffing of the pricing aspect, will stand completed with effect from April 1, 2021, for certain businesses (dwellings and micro level and small level enterprises).