IRDAI permits insurers to design and file alternative products covering Fire and allied perils.


The Insurance Regulatory and Development Authority of India (IRDAI) vide its circular dated 12th May 2022 has permitted general insurers to design alternative products to cover risk from fire and allied perils for dwellings and small businesses. This circular shall come into effect from 1st June, 2022.

The Authority earlier issued guidelines for standard products for Fire and allied perils for dwellings, micro and small businesses, namely Bharat Griha Raksha, Bharat Sookshma Udyam Suraksha and Bharat Laghu Udyam Suraksha. 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.

However, due to the increasing demand for new covers in the fire line of business, the Authority has permitted general insurers to design and file alternative products covering Fire and allied perils.

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, 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.

One of the objectives of permitting alternative products is to insure evolving fire insurance risks of Dwellings, Micro and Small Businesses to increase insurance penetration.

It also aims to identify protection gaps in the existing fire insurance products and address the changing needs of market with due consideration to the policyholders’ interests in terms of suitability and affordability.

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