Rural insurance premiums may take a hit

MUMBAI: Insurance companies that depend on distributors and agents to sell their policies could see their business slump in the next few months as their main mode of collection through cash gets hurt with the de-monetisation of high value denomination.

In many parts of the country, especially rural India, insurers accept cash. Premium is required to be paid in advance and there is a limit of Rs 50,000 set by the insurance regulator for cash payments. Anything beyond this has to be paid in cheque or DD or online.

“Those who pay premium of up to Rs 50,000 in cash will find it incon venient,” said an official of Insurance Regulatory and Development Authority of India (Irdai). “They will have to move to cheque or other modes of payments to buy in the next few days.”

Prime Minister Narendra Modi on Tuesday stripped off the legal tender status for Rs 500 and Rs 1,000 currency notes as he attempts to eradicate black money and improve the tax collection system.