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As many as 25.7 per cent of new policies of life insurance companies in 2012-13 were sold in the rural sector. According to Insurance Regulatory and Development Authority’s (Irda) annual report for 2012-13, all the 23 private sector life insurance companies had fulfilled their rural sector obligations.
According to Irda rules, these insurers should underwrite 25 per cent of their policies in the rural sector. In its report, Irda said Life Insurance Corporation of India (LIC), the lone public sector insurer, was compliant with its obligations in the rural sector, writing a higher percentage of policies (25.44 per cent of new policies) in the rural sector than the prescribed 25 per cent.
Out of the total 44.1-million new policies, the life insurers underwrote 11.3 million policies in the rural sector in 2012-13. While LIC underwrote 25.44 per cent of new policies in the rural sector, private insurers did 26.99 per cent.
According to Irda’s regulations, insurers are required to cover year-wise prescribed targets, in terms of the number of lives under social obligations; and year-wise prescribed targets in terms of percentage of policies to be underwritten and the percentage of total gross premium income written directly by the life and non-life insurers, respectively, under rural obligations.
The regulations require insurers to underwrite business in these segments based on the year of commencement of their operations and the applicable targets are linked to the year of operations of each insurer.
With respect to the social sector obligations, Irda said that among the 23 private life insurers, 22 had fulfilled their social sector obligations during 2012-13. It added Sahara Life Insurance could not achieve its stipulated target in the social sector.
LIC was compliant with its social-sector obligations, having covered more number of lives than the prescribed two million lives for 2012-13. Private life insurers had covered 5.02 million lives and LIC covered 13.2 million lives in the year 2012-13.
Public-sector general insurers’ rural-sector obligation was seven per cent of the quantum of insurance business written by them in 2012-13.
The non-life insurers had underwritten a gross direct premium of Rs 8,196 crore in the rural sector, which is 12.69 per cent of the gross direct premium underwritten (Rs 64,583 crore) by them in 2012-13.
Public and private general insurers had underwritten 12.87 per cent and 12.47 per cent of their gross direct premium, respectively, in the rural sector. In the social sector, 203.08 million lives were covered during 2012-13. The contribution of the private non-life sector was 36.08 million lives and public sector accounted for 167 million lives.
