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IRDAI directs insurers to increase focus on rural areas and social sector by setting a certain business commitment. According to the new norms, at least 10% of the total lives covered or total business generated has to come from rural areas and social sectors.
Rural sector includes areas administered under Gram Panchayats whereas social sector comprises unorganized sector, informal sector, economically vulnerable or backward classes and other categories of persons, residing in rural and urban areas.
Rural sector
In the rural sector, the insurers must collectively insure a minimum of 10% lives as a proportion of total lives insured in a minimum of 25,000 gram panchayats in the first year.
General insurers and standalone health insurers will have to collectively insure a minimum of 10% of people in a minimum of 25,000 gram panchayats under personal accident insurance and health insurance.
Social sector
All insurers including life, general and standalone health insurers will have to cover a minimum of 10% of lives in the social sector as a proportion of total lives insured.
Besides this, IRDAI has also specified the following for fulfilling the obligations:
- The obligations for rural, social sector and motor third party insurance will not be applicable if the insurer commences operations in the second half of the financial year
- An insurer who achieves more than the specified rural, social sector and motor third party obligations will be given a reward by IRDAI
- The obligations for the next two financial years will be decided based on the performance of the insurers this year