The Hindu Business Line : IRDA notifies changes to rural, social obligations

Hyderabad, Feb. 13 The Insurance Regulatory and Development Authority (IRDA) has notified amendments to Obligations of Insurers to Rural or Social Sectors Regulations, 2002.

The amendments also provide for alignment of obligations with the IRDA (Micro Insurance) Regulations, 2005.

As per the Gazette notification hosted on IRDA’s Web site, the rural obligations after the sixth financial year for a life insurer should have 18 per cent of the total policies written direct in the seventh financial year, followed by 19 per cent in the eighth and ninth financial years and 20 per cent in the tenth financial year.

For general insurers, it should be five, six and seven per cent in the seventh, eighth, ninth and tenth financial years respectively.

Social Sector

All insurers should provide cover for 25,000 lives (in the below poverty line families), 35,000, 45,000 and 55,000 in the seventh, eighth, ninth and tenth financial years of operation.

For the Life Insurance Corporation of India, the regulator has prescribed 24 and 25 per cent rural polices (of the total policies written) for 2007-08 and 2008-09 to 2009-10 receptively.

In the social sector, LIC should provide cover to 25 lakh lives each from 2007-08 to 2009-10.

The general insurers should have 6 per cent of the total gross premium written in the rural sector during 2007-08 followed by 7 per cent up to 2009-10.

In the social sector for 2007-08, it will be the average number of lives covered by the respective insurer from 2002-03 to 2004-05 or 5.50 lakh lives, whichever is higher. For 2008-09, the obligations for the existing insurers shall increase by 10 per cent over the number of persons prescribed for 2007-08.

For 2009-10, the obligations would increase by 10 per cent over the number of persons prescribed for the financial year 2008-09.

The obligations of the insurers towards rural and social sectors for the tenth financial year shall also be applicable in respect of the financial years thereafter.

While calculating obligations, the insurers should include the re-insurance premium, IRDA said.

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