Micro-insurance refers to insurance that is accessed by the low-income population and is provided by various providers and managed in accordance with generally accepted insurance practice. It forms part of the broader insurance market, distinguished by its particular focus on the low-income market. The draft Insurance Bill introduced the provisions of micro-insurance business that will be supervised by the Financial Services Board as from 1 January 2016.
The draft Insurance Bill specified that a micro-insurance business may conduct business as a short-term or long-term insurer. As the Income Tax Act deals with short and long-term insurance separately, it is proposed that micro-insurance business (as defined in the draft Insurance Bill) be deemed to be a short-term insurer for purposes of the Income Tax Act.
The amendments will come into operation on the date on which an insurer qualifies as a micro-insurer as defined in the Insurance Act, 2016, which is still to be promulgated.