Microinsurance verification fee cut

ISLAMABAD: National Database and Registration Authority (Nadra) slashed fee for verification of microinsurance policies to help promote insurance covers among low-income group, SECP said in a statement on Monday.

“Nadra, on the recommendation of technical committee on insurance, formed under the National Financial Inclusion Strategy (NFIS), has agreed to reduce the cost of its verification for microinsurance policies,” the Securities and Exchange Commission of Pakistan (SECP) said. “This will apply to the microinsurance policies sold through mobile, internet, digital and/or non-digital modes.”

The fee cut to Rs10/verification will reduce the premium for microinsurance policies, making it affordable for the low-income segment. The insurance verification fee became a special concern in case of microinsurance since it is significant in proportion to the value of microinsurance policy and the premium and is eventually recovered from microinsurance policyholder in the form of additional premium.

The government had launched the NFIS to enhance financial inclusion across all parts of the financial sector, including the banking, insurance and investments. The NFIS governance structure was established in the form of NFIS council, headed by the finance minister, and the NFIS steering committee, led by the State Bank governor.

“Microinsurance 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 microinsurance products,” SECP added.

In April last year, the NFIS technical committee on insurance had taken up the matter with the Nadra to rationalise the verification cost for microinsurance policies. The committee has already completed the task of development of standardised insurance glossary for the insurance sector in Urdu for insurance policy documents and promotional activities.