NADRA agrees to reduce micro-insurance verification costs
Staff ReportTuesday - January 23, 2018
According to detail, this will apply to the micro-insurance policies sold through mobile, internet, digital and/or non-digital modes.
The cut in the NADRA verification cost will reduce the premium for micro-insurance policies, making it affordable for the low-income segments.
It is expected that this will pave the way for development of the micro-insurance segment thereby achieving the objectives of the NFIS.
The government of Pakistan had launched the NFIS to enhance financial inclusion across all parts of the financial sector, including the banking, insurance and investments.
Accordingly, the NFIS governance structure was established in the form of NFIS council, chaired by the finance minister, and the NFIS steering committee, chaired by the State Bank of Pakistan (SBP) governor.
In its first meeting, the NFIS steering committee resolved to form 7 technical committees to focus on dedicated areas, one of which is the technical committee on insurance (NFIS-TCI), which is co-chaired by the insurance association of Pakistan (IAP) and securities and exchange commission of Pakistan (SECP).
The committee decided to promote micro-insurance segment by providing conducive operating environment.
Micro-insurance is the small ticket size insurance aimed at those segments that remain uncovered since the insurers are reluctant to serve them due to limited commercial viability of micro-insurance products.
The cost of NADRA verification became a special concern in case of micro-insurance since it is significant in proportion to the value of micro-insurance policy and the premium and is eventually recovered from the end consumer, that is micro-insurance policyholder in the form of additional premium.
Therefore, in April 2017, the NFIS-TCI had taken up the matter with NADRA to rationalise the verification cost for micro-insurance policies. After extensive deliberations, NADRA agreed to offer services at the reduced rate of Rs 10 per verification.
Apart from other initiatives, NFIS-TCI has already completed the task of development of standardised insurance glossary for the insurance sector in Urdu for insurance policy documents and promotional activities.
The SECP, on recommendation of the NFIS-TCI has also rationalised the enhanced due diligence (EDD) requirements for digitally distributed insurance through issuance of directive for corporate insurance agents and technology-based distribution channels, whereby premium threshold is specified below which, the insurance policies will be subject to simplified customer due diligence (CDD) requirements only, and not the enhanced due diligence (EDD).