New Delhi: The Department of Post is mulling selling insurance products of other companies, especially in rural areas, besides selling its own policies.
In a meeting chaired by Prime Minister Narendra Modi last month on the findings of a Task Force on India Post, DoP conveyed its intentions to enter the insurance space targeting rural India, sources said.
The proposed Post India Insurance will start with an initial capital of Rs100 crore that will be made available by DoP, they added.
“DoP debated that the insurance penetration in rural India is minimal and a new vehicle needed. Besides, the department has decades of experience in this field and it can seamlessly adapt to new operations,” a source said.
Besides selling its own insurance products, it can also undertake the business of selling policies of other insurance players as commercial agents, sources said.
DoP already offers insurance policy (Postal Life Insurance) to government and semi-government employees.
According to the Task Force, in rural areas there is a need for various types of insurances like crop insurance, accident cover, insurance of agricultural equipment, etc.
“Since India Post is operating in the insurance sector for well over a century, there is no reason why it should not be allowed to extend the spectrum of its insurance services to these areas through agency agreements or a broker’s licence,” it added.
At present, DoP offers personal life and endowment insurance policies under both, Postal Life Insurance (PLI) and Rural Post Life Insurance (RPLI). It recommended that “...the life insurance activities for the DoP should be hived off and converted into an independent corporate entity, which may be designated as India Insurance or given some other suitable name.”
Modi had set up the Task Force in 2014 to study leveraging the postal network in India and to enhance the role of India Post in financial inclusion, among other services like delivery of goods for e-commerce firms.
The report suggested that the government should set up a holding company under the Department of Posts for immediate roll out of banking, insurance and e-commerce services by the 1.55 lakh strong postal network.
The panel also suggested establishing Post Bank of India as a separate entity with a branch in each district in the first three years with initial capital of Rs500 crore to be funded by the government.