Centre seeks Irdai, GI Council view on retrenchment cover
The Centre has sought suggestions from the Insurance Regulatory Development Authority of India (Irdai) and General Insurance Council (GI Council) on the feasibility of an insurance cover for dealing with retrenchment, said people in the know. This comes in the wake of a large number of salaried individuals losing their jobs due to Covid.
In a recent letter to the Prime Minister, Union Minister for Road, Transport, and Highways Nitin Gadkari had suggested the need for an insurance product that gives subsistence salary for a limited period of time in case of job losses due to technological advancement, act of nature, or change in the economic structure.
The PMO forwarded the letter to the department of financial services, which has, in turn, sought suggestions from Irdai and GI Council.
The letter suggested that the premium for such a scheme be shared by the employer, employee, and government. “Insurance cover for retention retrenchment will add to social security available for employees through the EPFO (Employee Provident Fund Organisation) and ESIC (Employees’ State Insurance Corporation),” the letter said.
“The reference has come from the ministry to the GI Council, to check on the feasibility on a cover against retrenchment. It will be discussed on the council level, and then sent to the regulator for approval,” said the CEO of a private non-life insurer.
Another executive of a private sector insurer said: “There has been some movement but it is still in an exploratory stage. This will be a retail product just like a home or personal accident cover.”
Reinsurance major AXA Re had recently proposed an insurance product to both the Centre and state governments for covering loss of income during unforeseen events like a pandemic or epidemic.
It had recommended coverage of loss of income, due to involuntary loss of employment, for a maximum of 6 months — with a limit of ~1 lakh per month or 60 per cent of the last four months’ average income, whichever is lower. The proposed product also included life cover of ~5 lakh and personal accident cover, covering permanent total disability of ~5 lakh.
An official of GIC Re, India’s largest reinsurer, said non-life insurers have to formulate the product and file it with the regulator, and as a reinsurer it would try and give them as much reinsurance support as possible.