)
Life insurance companies sold 25.7% of new policies in 2012-13 in the rural sector. According to Insurance regulatory and Development Authority (Irda)’s annual report for 2012-13all the 23 private sector life insurance companies had fulfilled their rural sector obligations.
As per Irda rules, these insurers are needed to underwrite 25% policies in the rural sector. Irda in its report said that the lone public sector insurer, Life Insurance Corporation of India (LIC) was compliant with its obligations in the rural sector, writing a higher percentage of policies (25.44% of new policies) in rural sector than the prescribed 25% for 2012-13.
The life insurers had underwritten 11.3 million policies in the rural sector, out of 44.1 million new policies underwritten by them in 2012-13. LIC had underwritten 25.44% of the new policies and private insurers had underwritten 26.99% of their new policies in the rural sector.
The Regulations framed by the Authority on the obligations of the insurers towards rural and social sector stipulate targets to be fulfilled by insurers on an annual basis.
In terms of these regulations, insurers are required to cover year wise prescribed targets, in terms of number of lives under social obligations; and year wise prescribed targets in terms of percentage of policies to be underwritten and percentage of total gross premium income written direct 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 insurers had fulfilled their social sector obligations during 2012-13. It added that Sahara Life Insurance could not achieve their stipulated target in the social sector.
“LIC was compliant with its social sector obligations, having covered more number of lives than the prescribed 2 million lives for 2012-13. Private life insurers had covered 5.02 million lives and LIC had covered 13.2 million lives in the year 2012-13.
With respect to public sector general insurers, their rural sector obligation was seven% of the quantum of insurance business written by them in the accounting year 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% of the gross direct premium underwritten (Rs 64,583 crore) by them in 2012-13.
Public and private general insurers had underwritten 12.87% and 12.47% of their gross direct premium respectively in the rural sector.
In the social sector 203.08 million lives were covered during the year 2012-13. The contribution of the private non-life sector was 36.08 million lives and public sector accounted for 167 million lives.
