The Insurance Regulatory and Development Authority
(IRDA) has defined rural and social insurance products
in terms of the minimum and maximum sum assured. The
regulator also intends to include microinsurance under
its definition. With this insurers will no longer be
able to get away with selling low-value, low-premium
covers to rural folk to meet the rural and social criteria
has written to insurers saying that rural products will
have to offer a minimum sum assured of Rs5,000 for general
insurance and life insurance policies. However, health
insurance for family and personal accident per person
will have to be a minimum of Rs10,000. There will be
no upper limit on the sum assured.
life and non-life insurers are required to insure 20,000
lives from the social sector in the fifth year of operations.
The social sector includes the informal and unorganised
sectors, economically vulnerable and backward classes
from the rural and urban areas.
letter also mentions that microinsurance will now be
considered part of the rural/social policies. Irda has
also asked insurers to regularly keep it updated with
the number of policies insurers have sold.
life insurance companies are required to sell 7 per
cent, 9 per cent, 12 per cent, 14 per cent and 16 per
cent of their policies in rural areas in the first,
second, third, fourth and fifth financial years, respectively.
insurers need to earn 5 per cent of their gross written
premium from the rural years after the third year of