Sale of a Rs 7 battery in rural India is helping insurance companies meet their rural and social obligations as it combines a Rs 500 personal accident risk cover.
Insurance companies are pushing the sale of batteries, tying up with fertiliser companies to offer risk covers for every bag of fertiliser sold, and tea plantations to cover their employees.
Many are also vying to tie ups with state governments and state co-operatives to capture numbers in Rural India.
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All this rush is in order to meet the rural and social obligations as laid down by the Insurance Regulatory and Development Authority (Irda) considering the business growth that has taken place in fiscal 2003.
ICICI Lombard General Insurance Company has insured 25 per cent of the population of Gujarat covering 55 lakh farmers and 75 lakh landless labourers for a premium of Rs 4 crore paid by the state government of Gujarat.
Another 80,000 employees have been covered under personal accident plans taken by milk cooperatives in the states of Gujarat and Punjab.
Iffco-Tokio General Insurance offers insurance cover worth Rs 4,000 for every 50-kilogramme bag sold. Others have sold personal finance covers by pushing the sale of batteries.
These innovative selling measures are necessary when one is pushing sales where illiteracy is rampant, where premium collections pose problems and where insurance is not necessarily a top priority of the masses.
As per the Irda norms, two to three per cent of gross premium income has to come from the rural sector in the case of general insurance companies, and five to 10 per cent in the case of life insurance companies depending upon the number of years of operations.
Failure to meet the Irda norms would mean paying a penalty of Rs 5 lakh and up to three years imprisonment.
As private players lack well-established infrastructure of government companies, they are relying on alliances with cooperative bodies.
Said Tata AIG General Insurance Company managing director Dalip Verma: