Shriram General Receives IRDAI Regulatory Sandbox approval for Fire Loss of Profit Insurance Cover
Jaipur: Shriram General Insurance, part of the Shriram Group, has received the regulatory sandbox approval to launch an innovative concept, Fire Loss of Profit insurance cover. The product covers loss of gross profit or income, and/or increase in the cost of working due to reduction in business turnover/output caused by covered perils. Under Shriram General’s offering, liability will be admitted under the loss of profit policy when such loss is caused because of the mentioned perils without any compulsion of material damage policy.
Traditionally in India, Fire Loss of Profit Policy (FLOP) is contingent upon Material Damage (fire) Policy. This means that liability under FLOP can only be admitted if material damage policy is in force and material damage policy has been paid or admitted liability for the said property.
As a result, Loss of profit policies--also known as Business Interruption Insurance or Consequential Loss Insurance--are usually sold alongside Fire or Machinery Breakdown Insurance policies.
Insurance Regulatory and Development Authority of India launched the regulatory sandbox on Jul 26, 2019 under the IRDAI (Regulatory Sandbox) Regulations, 2019. Shriram General applied for the product under the second cohort, which was open for applications between September 15, 2020 and October 14, 2020.
Some Key Features Include the Following:
- The Standalone FLOP Insurance policy provides coverage against all the 12 perils covered under standard Fire & Special Peril Policy.
- The Validity Period of the product as per sandbox approval is six months commencing from November 15, 2021 to May 14, 2022.
- The policy can be availed without any Material Damage (Fire) cover.
- There is no such binding of first hand admission of liability under material damage Policy.
- This innovative product is specially designed for shopkeepers, hotels and restaurant, small scale manufacturing unit, automobile workshop, etc.
Mr. Anil Agarwal, MD & CEO of Shriram General Insurance Company said, “The regulatory sandbox initiative has allowed us to create an innovative and compelling, yet simple product. The company is targeting 10,000 policies on a pan-India basis. Business enterprises, especially smaller business units, have withstood the COVID-19 pandemic despite several challenges. Our priority and endeavour has been to provide them with solutions that can offer contextual value and support their growth journey. We believe the non-binding, first-of-its-kind Fire Loss of Profit Policy will cement our relationship, and help us prove to be steadfast partners of the small business community.”
