Centre mulling insurance coverage for sudden job losses

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, sources privy to the matter have said. This comes in the wake of a large number of salaried individuals losing their jobs due to the Covid-19 pandemic.

In a recent letter to the prime minister, Union minister Nitin Gadkari had suggested the need for an insurance product that gives subsistence salary for a limited period of time in case of job loss due to technological advancement, an act of nature, or change in the economic structure.

The Prime Minister’s Office forwarded the letter to the Department of Financial Services (DFS) which has, in turn, sought suggestions from Irdai and GI Council.

DETAILS OF THE PROPOSED SCHEME:

The premium for such a scheme is to 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.

Sources said, “It will be like life cover, personal accident cover and cover for loss of income. In case you are fired, six months payment will be covered.”

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.