Direction: Read the following passage carefully and answer the questions that follow.
 
Insurance regulator IRDAI has allowed distribution of all micro-insurance products through point-of-sales (PoS), with an aim further increase insurance penetration in the country.
 
The Insurance Regulatory and Development Authority of India (IRDAI) has created a special category of insurance policies called micro-insurance policies to promote insurance coverage among economically vulnerable sections of society. A micro-insurance policy is a general or life insurance policy with a sum assured of Rs 50,000 or less.
 
Agreeing to the suggestions of insurance companies, IRDAI in a circular has done away with the practice of pre-fixing the word ‘PoS’ on life, general and health products sold through PoS. The regulator said it has received representations from insurance companies requesting to do away with the prefix ‘POS’ in the product name.
 
Insurers made representations to change the norms that made it mandatory for every policy sold through the ‘Point of Sales Persons’ to be separately identified and pre-fixed by the name ‘POS’. IRDAI said the requirement was to identify the person involved in the sales process.
 
The IRDAI (Protection of Policyholder’s Interest) Regulations, 2017, under the matters to be stated in life, general and health insurance policy, makes it mandatory to give the details of the person involved in the sales process. “By virtue of this requirement, the need to have the prefix ‘PoS’ becomes redundant as the insurance policy itself will carry the details of the person selling such a policy,” the regulator said. The Authority, “hereby, discontinues requirements” of using the word ‘PoS’ prefixed before the PoS product name for life, general and health products.
 
Similarly, IRDAI said it has been observed that advantages such as higher insurance penetration, lower prices, increased choice to customers, which would otherwise accrue to the policyholder by making micro-insurance products available through POS channel are being lost. “Therefore, the Authority after reviewing the position, hereby allows all Micro Insurance products of Life, General and Health insurance to be distributed through the POS also,” the circular said.
 
On the manner of dealing with cases of health/personal accident (PA) policies where sum insured crosses the limit specified under the POS guidelines, IRDAI said the sponsoring entity is allowed to recognise such policies as being sourced by the POS and pay the fees to the POS.
1
Which among the following is /are correct regarding the Micro Insurance policies issued by insurance companies in India?

I. Micro Insurance policies are meant to give coverage to people who belong to the underprivileged section of the society
II. Micro Insurance policies are such that the sum assured in these policies is Rs 50000 or less than that.
III. Micro Insurance policies are only issued by banks and insurance companies because others are not authorized by IRDAI to issue such policies
» Explain it
A
Refer to, The Insurance Regulatory and Development Authority of India (IRDAI) has created a special category of insurance policies called micro-insurance policies to promote insurance coverage among economically vulnerable sections of society. A micro-insurance policy is a general or life insurance policy with a sum assured of Rs 50,000 or less.
 
Statement I is correct since it is mentioned that micro insurance policies are meant to be given to the people from the backward section of the society.

Statement II is also correct since it is also true that micro insurance policies are meant to give coverage of up to Rs 50000 or less.

Statement III is not correct since it is not mentioned anywhere if banks and insurance companies are only authorized to sell the micro insurance policies in the country but the Point of Sales persons are also eligible and that is the main theme of the passage.

So, both Statements I and II are correct.

This makes option A the correct choice among the given options.
» Explain it
C
Refer to, The IRDAI (Protection of Policyholder’s Interest) Regulations, 2017, under the matters to be stated in life, general and health insurance policy, makes it mandatory to give the details of the person involved in the sales process. “By virtue of this requirement, the need to have the prefix ‘PoS’ becomes redundant as the insurance policy itself will carry the details of the person selling such a policy,
 
It is clear from the above lines that IRDAI has made it mandatory now to add the details regarding the point of sales persons selling the insurance policies in the country and therefore, now there is no need to add the prefix in the name of the product.

Among the given options, option A is not correct since it does not make any sense as IRDAI is the authority and it will not issue guidelines for own whereas option B can be eliminated on the ground that the reason given in this option is not correct. Option D can also be eliminated because the information given here is not correct. Only option C explains the actual reason of the new guidelines issued by IRDAI regarding the POS channel of selling the insurance policies.

This makes option C the correct choice among the given options.
» Explain it
D
Refer to, Insurance regulator IRDAI has allowed distribution of all micro-insurance products through point-of-sales (PoS), with an aim further increase insurance penetration in the country.

It is clear that the only objective of the IRDAI to allow the distribution of the micro insurance policies through the POS channel is the aim of the authority to increase the insurance coverage in the country and moreover micro insurance policies are meant for backward people only, so, it would be great to make them available through this channel of distribution.

Among the given options, option A is not correct since it does not give the actual reason of the decision of the IRDAI to allow the POS channel to start distribution of micro insurance policies whereas option B is also not correct since the sentence itself does not make any sense and can be eliminated easily. Option C is not correct since this is not correct as per the information given in the passage. Only option explains the correct reason of the decision taken by the IRDAI regarding the distribution of the micro insurance policies.

This makes option D the correct choice among the given options.
4
Which among the following is/are correct as per the information given the passage?

I. The POS channel can also be used to distribute policies of insurance beyond the permissible limit of coverage.
II. The insurance companies are mainly responsible behind the decision of the IRDAI to remove the prefix ‘POS’ from the names of the insurance products.
III. The POS channel of distribution of insurance products will be used by IRDAI only and no insurance company will be able to use it
» Explain it
B
Statement I is correct since it is given in the passage that the POS channel of distribution will be used in order to provide policies which cross the permissible limit of coverage applicable to such channel by the IRDAI. Refer to, On the manner of dealing with cases of health/personal accident (PA) policies where sum insured crosses the limit specified under the POS guidelines, IRDAI said the sponsoring entity is allowed to recognise such policies as being sourced by the POS and pay the fees to the POS.

Statement II is correct since it is true that the insurance companies made representations to do away with the provision of addition of the prefix POS to all the insurance products sold through this channel of distribution. Refer to, Insurers made representations to change the norms that made it mandatory for every policy sold through the ‘Point of Sales Persons’ to be separately identified and pre-fixed by the name ‘POS’.

Statement III is not correct since there is no reference in the passage that IRDAI can only use the POS channel of distribution to sell the insurance policies and not the insurance companies. This is absurd because IRDAI is the regulator and it does not sell any policy itself.

So, statements I and II are correct according to the information given in the passage.

This makes option B the correct choice among the given options.
» Explain it
D
Refer to, Similarly, IRDAI said it has been observed that advantages such as higher insurance penetration, lower prices, increased choice to customers, which would otherwise accrue to the policyholder by making micro-insurance products available through POS channel are being lost. “Therefore, the Authority after reviewing the position, hereby allows all Micro Insurance products of Life, General and Health insurance to be distributed through the POS also,” the circular said.
 
Now, statement A is correct since IRDAI has accepted that the choices were fewer for the policyholders before since the micro insurance products were not available through the POS channel of distribution.

Statement B is also correct since with the availability of the micro insurance products through the POS channel of distribution, the premiums will become lower and more competitive as every insurance company will try to woo the customers with lower premium.

Statement C is not correct since there is no reference in the passage that the insurance companies used to offer the policies without any kind of customization before the decision of the IRDAI to allow micro insurance products to be sold through the POS channel of distribution. This can be eliminated.

This makes option D the correct choice among the given options.

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