IRDAI permits general insurers to design new fire insurance products for dwellings, small businesses

With an aim to give wider choices to customers and increase insurance penetration, regulator -- Insurance Regulatory and Development Authority of India (IRDAI) has permitted general insurers to design alternative products to cover risk from fire and allied perils for dwellings and small businesses. The IRDAI had issued guidelines for standard products for fire and allied perils for dwellings, micro and small businesses (Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha) in January 2021.

These standard products replaced the Standard Fire and Special Perils (SFSP) policy for the named risks and no product other than the standard products was permitted for fire and allied risks. It said ‘after considering the increasing demand for new covers in the fire line of business, the Authority…hereby permits general insurers to design and file alternative products covering fire and allied perils for the risks (de-notified earlier)’.

It added that such alternative products may be variations of the standard product and may include already approved add-ons as part of the base product or may delete an existing provision. However, it said the definitions and wordings of terms used in the standard product shall be the reference point for those terms when used in the alternative products as well. Needless to add, the pricing of the products shall be commensurate to the risks involved.