HOW CAN THE RURAL INSURANCE MARKETS BE PENITRATED FOR PERSONAL INSURANCE

Submitted to: Mr.M.Vijaya Kumar

Submitted by: S.Harini (Roll No. 010) (MLFS&CM)

NALSAR University of Law and Institute of Insurance and Risk Management

INDEX Table of contents:
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Page no.

1. CHAPTER I- INTRODUCTION 2. CHAPTER II- NEED FOR RURAL INSURANCE

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– RISKS FACED BY THE POOR
3. CHAPTER III- ADDRESSING DIFFERING PERSPECTIVES IN

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RURAL INSURANCE
4. CHAPTER IV- PRODUCTS OF PERSONAL INSURANCE IN

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RURAL SECTORS
5. CONCLUSION 6. REFERENCE

CHAPTER-I
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Thirdly. rural insurance has been emphasised since the nationalisation of life insurance business.INTRODUCTION The census of 2001 shows that the rural sector in India comprises 72% of the population and generates 26% of the GDP. It was noted in the section on regulation that. the government has actively pursued specific strategies such as crop insurance and the insurance of farm implements such as tractors and pumps. every private sector life insurance company has to achieve a certain proportion of their business in the rural sector. after five years of operation. The entities defined by the RBI are as follows.000 but less than 100.000 people. the rural sector is important both politically and economically. the density of the population or the activity of the population is of no relevance for the definition of the RBI.000 people. All definitions apply to the population size.” WHAT EXACTLY IS MEANT BY THE RURAL SECTOR? The term “rural sector” is confusing because not all government bodies use the same definition. it offered group policies to those who could not afford individual policies. Several distinct definitions (which are relevant for the insurance sector) have been used in the past. The only relevant factor is the number of people living in a well-defined geographical boundary. Thus. (1) A given geographical area is called rural if it has less than 10. DEFINING RURAL-INSURANCE The draft paper prepared by the Consultative Group to Assist the Poor (CGAP) working group on Rural-insurance defines Rural-insurance as “the protection of low income households against specific perils in exchange for premium payments proportionate to the likelihood and cost of the risk involved. with at least 15% of business in the rural sector after five years. Secondly.  The Reserve Bank of India (RBI) defines four different entities. Thus. it targeted the rural wealthy with regular individual policies. (2) A given geographical area is called semi-urban if it has more than 10. Firstly. for the very poor. The government followed a three-pronged strategy for life insurance. For the Life Insurance Corporation of India (LIC). the requirement is 18%. Naturally. it offered government-subsidised policies. 3 . For non-life insurance in the rural sector. It is a variable and rising proportion.

CHAPTER-II 4 .000. it was only 377 million a reduction of over 40%. an Expert Committee was set up by the IRDA to examine the remuneration system for insurance brokers and agents. This has resulted in pragmatic problems for insurers planning to fulfil the rural sector obligations. However. The rural population.  Under the “Obligations of Insurers to Rural Social Sectors” of the Insurance Regulatory and Development Authority Act. The census of 1991 defined an urban area as an area that has all of the following three characteristics: (1) A minimum population of 5.  It may seem like a matter of semantics to see the differences in definition between rural and urban areas but it is not the situation. “Rural sector” shall mean any place as per the latest census which has: (i) (ii) (iii) A population of not more than 5. (4) A given geographical area is called metropolitan if it has more than 1. according to the census definition in 1991 was 629 million.000. In 2003. (2) At least 75% of the male workers engaged in non-agricultural pursuits. and (3) A population density of at least 400 persons per square kilometre. according to the IRDA definition. the definition of a rural area is by default whatever is not covered by the definition of an urban area. The only category it explicitly defines. and At least 75% of the male main working population is engaged in agriculture. according to the IRDA definition. However.000.000”. According to the Census definition. the IRDA defines the rural sector as follows.(3) A given geographical area is called urban if it has more than 100.  These anomalies have caught the attention of law reformers. 1999. Thus. One of the suggestions it made was to change the definition of the term rural area as follows: “The definition of what constitutes a rural area should be based on the census and should be revised to an area with a population up to 30. it will be classified as urban.000.  The Census of India recognises two areas: urban and rural. For example.000 people.000 but less than 1.000 people. however. suppose an area has 35% of males working in agriculture. is urban. The Report of the Expert Committee also made suggestions on some broader issues. A density of population of not more than 400 per square kilometre. the area will be classified as rural.

The poor face more risks than the well-off. provide greater economic and psychological security to the poor as it reduces exposure to multiple risks and cushions the impact of a disaster. self-insurance. However. epidemic.  Partnership between an insurer and a social organisation like NGO would be desirable to promote rural insurance by drawing on their mutual strengths.  Design of rural insurance products must have the features of simplicity. (In addition. eg. mutual insurance) which were appropriate earlier are no longer adequate. Usually. the Committee feels that rural insurance has not penetrated even among the urban poor). pricing. go a long way in keeping this segment away from the poverty trap and would truly be an integral component of financial inclusion. GoI constituted a Consultative Group on Rural Insurance to examine existing insurance schemes for rural and urban poor with specific reference to outreach. Rural insurance should. savings. accessibility and flexibility. the prevalent forms of risk management (in kind savings.  Rural insurance has not penetrated rural markets. Rural insurance in conjunction with micro savings and micro credit could. servicing and promotion and to examine existing regulations with a view to promoting rural insurance organisations with specific reference to capital requirements. Poverty is not just a state of deprivation but has latent vulnerability.NEED FOR RURAL INSURANCE – RISKS FACED BY THE POOR Rural insurance is a key element in the financial services package for people at the bottom of the pyramid. the poor face two types of risks – idiosyncratic (specific to the household) and covariate (common. Findings of the UNDP Study Report 5 . licensing. To combat these risks. The report of the consultative group has brought out the following key issues:  Rural insurance is not viable as a standalone insurance product. loans from friends and relatives. the poor do pro-active risk management – grain storage. CONSULTATIVE GROUP ON RURAL INSURANCE CONSTITUTED BY GOI In 2003. etc. Traditional insurers have not made much headway in bringing rural insurance products to the rural poor. etc). drought. etc. therefore. products. affordability. monitoring and review. therefore. asset accumulation (specially bullocks). There is an overwhelming demand for social protection among the poor. but more importantly they are more vulnerable to the same risk. availability.

attempt at addressing key issues that will improve customer satisfaction (demand-supply gaps. capturing the concerns of different stakeholders as indicated below : (i) There are specific reasons for low demand for insurance in spite of intense need. appropriate products and pricing). The UNDP report further states that rural insurance solutions should. Building and sharing claims histories can help in aligning pricing decisions with actuarial calculations. In the absence of a historical data base on claims. inclusive insurance is expected to be a “low ticket” business. (v) Cumbersome and inappropriate procedures inhibit the development of this sector. The UNDP report has analysed six key issues pertinent to the growth of the rural insurance industry in India.are not covered by insurance and signify an untapped market of nearly US$2 billion. Efforts at product development / diversification have been limited. (vi) Contrasting perspectives of the insured and the insurers. combined with underutilization of available distribution channels.A study commissioned by the United Nations Development Programme (UNDP) titled “Building Security for the Poor . serious mismatches between the needs of the insured and the insurers must be overcome. (iii) Pricing. lead to low customization of products and low demand for what is available. Consequently. (ii) There are challenges in product design. the rural market is characterized by limited and inappropriate services. provide distribution efficiencies for better outreach and 6 . pitting priorities against profits. including willingness to pay and the availability of subsidies.some 950 million people . managerial and financial. The high costs of penetrating rural markets. inadequate information and capacity gaps. This enormous “missing market” is ready for customized life and non-life insurance. Suppliers have their own concern which helps to explain why there have been so little efforts at market development. thereby reducing prices. both. but first. requiring volumes for viability.Potential and Prospects for rural insurance in India” states that 90% of the Indian population . premium calculations are based on remote macro aggregates and overcautious margins. therefore. (iv) Difficulty in distribution is one of the most cited reasons for absence of rural insurance. hinder the growth of rural insurance services. This adds to costs. which has resulted in a mismatch between needs and standard products on offer. influence the market. Like inclusive credit.

. Yeshaswini Scheme of the Government of Karnataka) which have also generated considerable acceptance and awareness about insurance products in the rural areas. which have facilitated the improvement of income levels of many rural households.remove procedural hassles facilitating easier renewals and claim settlements. the report has also suggested that the premium payable on rural insurance be exempted from payment of service tax. 7 .  There are a wide range of developmental programmes being supported by the Government like the SGSY. At present.. The following factors could provide the needed impetus to push micro insurance to the “next level” in terms of growth and outreach:  The widening. the only borrowable-linked risk mitigation mechanisms available to rural households. ENABLING ENVIRONMENT FOR RURAL INSURANCE IN THE INDIAN CONTEXT Helping the rural poor systematically manage financial risks to their livelihoods and lives through rural insurance offers innovative ways to combat poverty in India. The GoI-package of “Doubling Flow of Agricultural Credit” has also enabled greater institutional credit flow for agriculture and allied activities. though ambitious in stated intent. what is of concern is that all these interventions. deepening and up scaling of microfinance interventions has provided the institutional precincts on which the edifice of Rural-insurance could be built in rural areas. the Personal Accident Insurance Scheme (PAIS) which is being provided as a bundled offering along with the Kisan Credit Card (KCC) Scheme and the Rashtriya Krishi Bima Yojana (RKBY) for insuring crops are.  This only amplifies the felt need of this segment for protection of their lives / income- generating assets against various perils. probably. which will also enable greater penetration in rural markets. With a view to reduce costs. women . etc.are largely excluded from the insurance market.  Further. if at all. many State Governments are offering health insurance facilities to the rural poor (eg. the NREGP. only incidentally address risk.  However. The most vulnerable rural population in particular. The timing of the UNDP study is strategic as policy interest has been renewed in energizing the rural insurance market in India.

 Though the 2005 IRDA regulations on rural insurance have some restrictive aspects. the RBI permitted RRBs to undertake insurance business as a “corporate agent” without risk participation.  8 . In October 2004. Thus. banking outlets (which number close to 70. without any further addition to transaction costs.000) and more than 1 lakh cooperative societies could provide the needed outreach to purvey micro-insurance facilities. they could play an important role in increasing outreach. Its most innovative feature is legally recognizing NGOs. As RRBs have a network of branches in rural areas. they have also a number of positive features. MFIs and SHGs as “rural insurance agents.” This has the potential of significantly increasing rural insurance penetration. Many commercial banks have partnered foreign insurance companies for providing life insurance policies.

viz. Community Based Model:  The policy holders own and manage the insurance program. adverse selection and poor infrastructure which results in high claims costs. cost-effective and sustainable model. and negotiate with external health care providers. moral hazard. The same is true of the Indian experience also.. for enabling the growth of an affordable. viz. Obviously. administrative costs and consequently inadequate coverage have to be addressed effectively. the core problems in institutional insurance. Full Service Model:  The provider is responsible for all aspects of product design.  The insurers are responsible for all insurance-related costs and losses and they retain all profits. The Committee studied four different models for delivering rural insurance services to the targeted clientele: Partner .. need. Provider Model: 9 .  There is no risk and limited administrative burden for MFIs. servicing. there are contrasting perspectives which have traditionally impeded the growth of this sector globally. affordability and willingness vis-à-vis the insurer’s.Agent Model:  Insurers utilize MFIs’ delivery mechanism to provide sales and basic services to clients. DELIVERY MECHANISM: RURAL INSURANCE MODELS A key concern in the pricing of an insurance product is the element of cost of acquisition and its delivery. and claims assessment. The competing perspectives of the insured. the delivery costs have to be contained to keep the cost of insurance sufficiently low to attract the poor and to incentivise the insurer to venture into this segment viewing it as a genuine market opportunity.CHAPTER-III ADDRESSING DIFFERING PERSPECTIVES IN RURAL INSURANCE As already indicated. Further. insurability.. profitability and deliverability continue to be the core dilemma in rural insurance thru’ institutional sources. sales. viz.

2003. Group A represents households where the chief wage earner has 10 or more years of education. Table 3.e. savings and education. even though some 51% confessed no intention to purchase any insurance at all. Challenges & Opportunities”. B represents people with 5 to 9 years of education. “Rural Insurance: Issues.1: Distribution of insurance buyers in rural India. whereas in Group C. Among the group of people who did not buy insurance. Source: Forte Group. DRIVERS OF RURAL INSURANCE DEVELOPMENT DEMAND SIDE  The main economic drivers for general insurance are growth in income. B 5 to 9 years and C no more than 4 years. The service provider and the insurer are the same. and C represents people with no more than 4 years of education. the survey divided the households into three different groups based on the educational achievements of the chief wage earners (including women). The same drivers apply in the rural sector. 44% of the households had some life insurance policies. in Group A. i. 2002 Note: Group A represents people with 10 or more years of education. A survey was conducted by Forte Group in 2003 of 1172 rural households to examine the characteristics of insurancebuying households in the rural sector.. Education of the chief wage earner was highly correlated with the income of the households. This point to a large disposition towards buying 10 . almost a third of the low-education group did consider buying insurance. only 15% did. The incidence of buying non-life insurance was less than half in all groups. hospitals or doctors offer policies to individuals or groups. Firstly. The total number of respondents was 1172 from three geographical areas in Uttar Pradesh and Andhra Pradesh. Not surprisingly. Some of the findings are highlighted in Table 3.1.

11 . the rural population is much more aware of life insurance than non-life insurance. The total number of respondents was 1172 from three geographical areas in Uttar Pradesh and Andhra Pradesh.2 below show that the awareness of the need for life insurance is high across all segments. Challenges & Opportunities”. Buying land and medical expenses ate up another 7% each. In general. These findings demonstrate that the key economic elements driving insurance buying in the rural sector are in place. Table 3. Surprisingly. In terms of the proportion of income saved (among the households that did save). In Segment B and C. “Rural Insurance: Issues. Upgrading housing was done with another 10% of the savings. and C represents people with no more than 4 years of education. the proportion tops 70% in all groups. For Group A households.insurance in all income groups. the levels of awareness are somewhat lower. Awareness of the need for motor and accident insurance follows the same pattern: more than 70% of the respondents in Group A are well aware of the need for them. more than 60% in Group B and 45% in Group C. For other kinds of insurance. B represents people with 5 to 9 years of education. When other forms of saving are included. The results in Table 3. Supply side There are two critical elements to success on the supply side of insurance in rural areas: products that are suitable for the rural population and an adequate distribution mechanism. Source: Forte Group. the proportion of households saving in institutions was 49% and 43% respectively. it is above 35% in all groups. 2003.2: Spontaneous and aided awareness of insurance Note: Group A represents people with 10 or more years of education. the savings rates are high for all households regardless of their level of education. Awareness is another important factor driving demand for insurance. 78% saved in formal institutions (mainly in Post Office savings accounts and in banks).

verification of age and fixed address may be cumbersome in t he rural areas.3: Distribution of urban and rural agents as of 31 March 2003 Key hurdles Despite government promotion. Using wider age bands for life insurance policies would simplify the procedure. However. There is a great variation in rural distribution of insurance among life insurers. Fourthly.3 below lists the distribution of rural versus urban agents for different insurance companies both in the life and in the general insurance sectors. rural insurance has remained a small part of the total market. the general buying capacity is lower in the rural areas. Traditional agents are still the most effective means to penetrate rural areas. the income pattern in rural areas is different from in urban areas. although the use of bank branches is on the rise. Specifically. Therefore. In its Annual Report of 2002-2003. This problem has been recognised by the IRDA. policies have to be region-specific. There are two main crops during a calendar year. simplified products would be preferable for most customers. Table 3. Thus. Thirdly. Firstly. this means selling life insurance with a lower minimum face value. this pattern of income is not universal across all regions. Secondly. the level of education is lower in the rural areas. Consumer goods have been marketed very successfully in the rural markets by lowering the “unit size”. For insurance products. Most insurance companies see rural business as an obligation rather than an opportunity. in many parts of rural India. Table 3. Therefore. the IRDA 12 . The development of rural insurance products should have the specific needs and capacity of the rural population in mind.These will be discussed in turn. a semi-annual payment of premiums is preferred. income follows crop cycles. A number of insurance companies are already following one or more of these avenues.

4). 2002-2003 13 . This. Similarly. particularly due to the prevalence of strong saving habits. of course. their perception towards the importance of different types of insurance. is in addition to the agent force. It is. the savings are high around harvest time. on the other. In addition.” For non-life insurance companies. there is no felt need for insurance. spontaneous awareness levels are low. there is a need to understand the psyche of the rural populace. the rural market offers a vast potential for the insurance sector. In order to tap these markets. Even the relatively low-income families tend to save about a third of their annual earnings. particularly for general insurance products. This list shows a far lower penetration of rural business for non-life companies. the need for spreading insurance throughout the country is a necessity. however.4: Rural sector performance in the non-life insurance sector.stated the following. Table 3. other than in cases of mandatory requirements. Listed below are the rural market penetration rates of all non-life insurance companies (Table 3. the story is somewhat different. The various channels of savings include banks. “While on the one hand. a matter of concern that. and jewellers. post offices and informal institutions like local lenders. and their willingness to purchase policies. which has essentially remained untapped so far. auto dealers financing vehicles create awareness for motor vehicle and tractor insurance. with the purchasing power parity of the rural population steadily growing. In the agrarian belts. on account of social considerations. Studies have shown that the rural market holds tremendous potential for growth of the insurance business.

1: Relationship between the proportion of rural agents and rural customers in non-life insurance 14 .000 lives respectively. Public-sector insurers are required to exceed the performance in the previous year. II and III is 2. Private insurers ‘obligation in the social sector in years I.1. II and III is 5. however. July 2003.Notes: Private insurers’ obligation in the rural sector in years I. the same clear relationship does not exist in life insurance. There is a very clear positive relationship. Figure 3. and have done so. 3 and 5 percent of gross premium income respectively. This could be due to the fact that bancassurance is being pursued more aggressively in the life insurance sector.500 and 10. Source: IRDA Journal. This is demonstrated in Figure 3.000.39 One of the key features of non-life insurance is the clear relationship between the proportion of rural agents deployed and the proportion of policies sold by companies. This has helped some life insurance companies to reduce their reliance on traditional agents. pg. and have done so. 7. Public insurers are required to exceed the performance in the previous year.

income etc.one eye and one limb due to accident. 10.10. CHAPTER-IV PRODUCTS OF PERSONAL INSURANCE IN RURAL SECTORS GRAMIN ACCIDENT INSURANCE:  APPLICABILITY: The Insurance can be granted to any person between the age group of 10 to 70 years irrespective of his occupation.Sources: IRDA Annual Report.000/(B) Total irrecoverable loss of use of 2 limbs or Rs.  BENEFITS (A) Death due To Accident Rs. 5.000/ EXCLUSIONS 15 . (C) Total irrecoverable loss of one eye or one limb Rs.000/. 10.000/(D) Permanent total disablement due to accident Rs.

Death/injury/disablement of the insured from: (a) Intentional self injury. (B). suicide or attempted suicide. 50% OF S. SUM INSURED PAYABLE 100% OF S.Company shall not be liable for: i. ii. 100% OF S. (C) & (D) in respect of same injury/disablement.e. v. w. 100% OF S. Permanent total disablement due to accident.I. Total and irrecoverable loss of sight of one eye or loss of use of one hand or 4. it is no longer under Market Agreement. Death or bodily injury arising out of ionizing radiation or contamination by radioactivity from any source what so ever.f May 2003. TABLE OF BENEFITS Death Total and irrecoverable loss of sight of both eyes or losses of use of two hands or feet or loss of sight of one eye and 3.1 S. terms and conditions. (c) Directly of indirectly caused by insanity. loss of use of one hand or foot. JANTA PERSONAL ACCIDENT This was governed by Market Agreement to be followed by all the four subsidiary companies in respect of rates. Payment of compensation in respect of injury/disablement directly or indirectly arising out of or contributed to by or traceable to any disability existing on the date of issue of the policy. iii. foot. 2.I.I 16 .I. The scope of the cover provides indemnity to the insured against death or disablement due to accident as per the following table 4. However.No 1. (b) Whilst under the influence of intoxicating liquor or drugs. The insurance cover can be given to any person between the age group 10-70 years. Compensation under more than one of the sub clauses (A). iv. Policy is available on long-term basis also and is also subject to group discount and longterm discount. Compensation arising out of war and allied perils. (d) Arising or resulting from the insured committing any breach of law with criminal intent.

and premium charged accordingly. 00. Nuclear group of perils.25. shooting. ice hockey. Holders of Deposit Certificates issued by Banks/NBFC’s. vi. Disablement or death under influence of liquor or drug iv. The groups which are eligible for this discount are defined under 7 categories: i.3. This policy covers people between age of 3 months to 65 years.per person per annum and the maximum sum insured is limited to Rs.and sum insured shall be increased in multiples of Rs.25. 000/. Members of registered service clubs . 00. Death injury or disablement due to intentional self injuries. v.1. Group discount is available for a group size of 101 and above. iv. Long-term discount is also available for a maximum period of 5 years however the aggregate discount inclusive of long term discount and group discount shall not exceed 30%. EXCLUSIONS i. iii. Employer-employee relationship including dependents of the employee.000/. v.  Scope of Cover: This policy has three covers as under: 17 . mountaineering.for Rs.15/. Breach of law with criminal intention Vii. The premium is Rs. Death or disablement during racing. suicide or attempted suicide. Insanity. vii. ii. viii.  Sum Insured: The policy may be issued for a minimum sum insured of Rs. winter sports. Shareholders of Banks/Public Limited Companies. Holders of credit cards of Banks/Diners/Master/Visa. 000/.000/. 000/.25. UNIVERSAL HEALTH INSURANCE SCHEME This is a health-care policy for weaker sections of society/below poverty line and is akin to Medi claim policy with certain modifications and adds on covers. vi. big game hunting. Pre identified segments/groups where the premium is to be paid by the State/Central Governments.and up to Rs. Members of a registered co-operative society.(subject to income proof) per person per annum.War Group of perils. Any existing disability ii. iii.

can be availed of individually or collectively by members of the family. 30.000/-).50 per day Rs. Sinusitis.2.1.365/-p. and diseases contracted during the first 30 days from the commencement date of the policy b.000/. Cost of spectacles. 100/. 1. c. d. Hernia. contact lens and hearing aid  Claim Settlement: The Claims are to be settled by a Third Party Administrator (TPA) mentioned in the schedule or by the Insurance Company and to be made cashless as far as possible through listed hospitals.730/-p.to an individual/family with sub-limits (Maximum per illness Rs.000/ Disability Cover: If the Earning Head of the family is hospitalized due to accident/illness compensation of Rs.e.00 per day Rs.548/-p.per family. UNIVERSAL HEALTH INSURANCE SCHEME –  For BPL Families 18 . All pre-existing diseases.a For a family up to 7 (Including the first 3 dependant children and dependent parents) For families below the poverty line. Some of the diseases such as Cataract.  Main Exclusions a.  Personal Accident Cover: Coverage for death of the Earning Head of the family due to accident: Rs. Benign Prostatic Hypertrophy. Corrective. 30. Hydrocele. Category For an individual Premium Payable Re. 25.This cover is available on floater basis i. cosmetic or aesthetic dental surgery or treatment. Piles. after a waiting period of 3 days. 50/. Medical Reimbursement: The Policy provides reimbursement of hospitalization expenses up to Rs. Congenital Internal Disease are not covered in the first year of the policy. Hysterectomy.00 per day Rs. the Central Government will provide a premium subsidy of Rs. 15.000/.per day will be paid per day of Hospitalization up to a maximum of 15 days.a Rs. total reimbursement of Rs.a For a family up to 5 (Including the first 3 dependant children) Rs.

of India to provide Universal Health Insurance Scheme to the people who are below poverty line in the States of Delhi.e. 000/.can be availed of individually or collectively by members of the family. The benefit of the family will operate on floater basis i.165/-per annum Rs. the total reimbursement of Rs. Personal Accident Cover: Coverage for Death of the Earning Head of the family due to accident: Rs.30..330/.25.10000/. Disability Cover: If the earning head of the family is hospitalized due to accident/illness compensation of Rs. Category Premium Subsidy by  Payable GOI For an individual Rs.15000/-. J & K.(Including the first 3 dependent children and dependent parents)  Main Exclusions: As per Mediclaim Policy  Claim Settlement: The Claims are to be settled by a Third Party Administrator (TPA) mentioned in the schedule or by the Insurance Company and to be made cashless as far as possible through listed hospitals. Uttaranchal & Chandigarh (UT).248/. 3.50/. 000/. 300/. Haryana. Punjab.P.Oriental Insurance Company has been nominated by Govt.  Scope of Cover: This policy has three covers as under: 1.200/. SWASTHYA BIMA POLICY (Health Insurance Policy for members of SHGs and Credit Linked Groups)  Salient Features:  Hospitalization: Reimbursement of Hospitalization expenses upto Rs. Rajasthan.per day will be paid per day of hospitalization up to a maximum of 15 days after a waiting period of 3 days. 200/For a family upto 5 Rs.30. Medical reimbursement: The Policy provides reimbursement of hospitalization expenses up to Rs. 400/.(Including the first 3 dependant children) For a family upto 7 Rs.during policy period (Subject to admissibility of claims).per annum Rs. 2. Himachal.  Transportation: Reimbursement of the cost of transportation of Insured to hospital upto Rs. 19 .to an individual – member.per annum Rs.to an individual/family with sub limits (Maximum per illness Rs. U. 000/-. Age limit: 3 months to 65 years.

terrorism cover to building and contents 1b. non-market agreement premium is available. house breaking.p. Burglary and house breaking for contents excluding money and valuables. 20% discount is available as above. which will comprehensively satisfy probable insurance needs of different categories of farmers. For more than 6 and up to 8 sections. however unprocessed grains kept in field immediately after harvesting for post harvest operations is covered as per Khalihan Bima Policy. Fire and allied perils.150/. theft. The above mentioned products are few personal insurance products offered to rural sector but there some products which offer House Hold Cover. Section 1a & b covering Fire and allied perils and burglary and house breaking is compulsory and the farmer has to opt for minimum 3 sections. Medi claim and Health cover together in package policy with other non-personal insurance policies i. Service Tax * As applicable TPA Charges * As applicable  Scheme to be implemented for Self Help Groups (SHGs) and Credit Linked groups  Claims Settlement: Settlement of claims directly by Insurers or through TPAs for Section I only. legal liability 20 . Section 3 – Television set This provides cover for loss to the television apparatus and insured premises by fire and allied perils. Main Exclusions: As per Medi claim Policy. Personal Accident Cover. KISSAN PACKAGE POLICY This policy contains 15 sections including tariff and market agreement sections.during policy period (subject to admissibility of claims). If farmer opts for more than 4 and up to 6 sections a discount of 15% on non-tariff. 1. Fore more than 8 section 25% discount as above is available.30/- per day of hospitalization and not exceeding Rs. Meals: Reimbursement of the cost of meal for the insured patient not exceeding Rs.120/.  Premium: For Individual * Rs.e.a. accident or electrical breakdown. Section 2 – Stock of farm produce This provides indemnity to damages to the stock of farm produce against fire and allied perils. The 15 sections are as under: Section 1 – Building and Contents This section has 2 sub sections 1a. burglary.

civil commotions risk. This provides indemnity against the loss of or damage to the building contents structure by fire and allied perils. Section 6 – Insurance of artisans village/cottage industry. Section 5.P. The original investment in equipment and machinery should not exceed Rs. theft/burglary (due to violent forcible entry provided the pumpset is kept in locked enclosure).10.000/-. Section 8 – Kissan Agricultural Pumpset This insurance covers both centrifugal (electrical/diesel) and submersible pumpsets upto 25 H.5. Section 9 – Poultry/Duck Insurance This cover is available to the Poultry/Duck farm owned by the farmers. damage to insured property caused by breakage of antenna fitting for a limit upto Rs. riot and strike and civil commotion) or diseases as per our Poultry Insurance Policy. RSMD and terrorism. stock and stock in process should not exceed Rs.000/Section 4 – Pedal cycle/Cycle rickshaw This provides indemnity against damage to cycle rickshaw due to accident.Animal Driven Cart Insurance 21 . as per our Kisan Agricultural Pumpset Insurance Policy. against loss or damage due to fire and lightning. It also provides personal accident cover for rickshaw owner and family on additional premium. strike.00 lacs. third party legal liability to driver. This insurance covers all types of exotic and cross breed poultry birds and ducks against death due to accident (including fire. riot. Section 7 – Cattle & Livestock Insurance Under this insurance. Section 11.00 lacs and the total value at risk including building and machinery.upto 25. As per our cattle/livestock Insurance policy. animals are covered against death due to diseases or accident (including fire/lightning/famine/flood cyclone) surgical operation. passengers and property. tiny sectors including bio-gas. Section 10 – Baggage Insurance This insurance indemnifies the insured against loss of or damage to accompanies baggage by accident or misfortune (lost or destroyed) whilst the insured is travelling anywhere in India. famine.3. lightning.Personal Accident Insurance This section provides cover against death and permanent disablement both partial and total arising out of accident as per JPA or Gramin policy. mechanical/electrical breakdown.

specified diseases namely Thaisac and Iridovirus and also pesticide poisoning from crops foraged by Honeybees on payment of stipulated additional premium.P. riot and strike. flood. mule. cyclone. explosion. 22 . Section 12 – Honey Bee Insurance This section will provide insurance protection to Beehives and bee colonies against loss/damage as a result of an accident (Basic cover). burglary. tempest. flood and inundation. cyclone. Premium rate to be charged is as per Indian Motor Tariff. fire and shock. bullocks. It also includes third party liabilities as per Motor Vehicle Act 1988. rockslide. inundation. Premium rates other terms and conditions will be as per our Honeybee Insurance Policy.10. liability and death. donkeys and camels and also the animals pulling it. hurricane. Section 13 – Gun Insurance This section is intended to cover loss of or damage to the guns. Section 14 – Medical hospitalization expenses excluding Domiciliary hospitalization This scheme provides compensation for the expenses incurred in hospitalization subject to limits of sum insured. bulls. which includes fire. storm. tongas and coaches drawn by buffaloes. storm. house breaking. Section 15 – Agricultural Tractor Insurance This indemnifies the insured against loss to the agricultural tractors and or its accessories by fire. lightening. typhoon. hurricane and tornado. This may however be extended to cover loss/damage during transit. T. malicious act. landslide. frost. tempest. Third party property and third party personal injury liabilities both together shall be limited to rs. belonging to the insured from any cause (including the bursting of Barrels except while undergoing test and excluding wear and tear) upto an amount not exceeding the declared value.This insurance covers carts. horse. disablement of the driver as per Animal driven cart Insurance policy. due to theft. theft. accident.000/. self ignition. hailstorm. whilst in transit by road. terrorism. rail and inland waterways. earthquake.any one accident any one year.

CONCLUSION Policy-induced and institutional innovations are promoting insurance among the low-income people who form a sizable sector of the population and who are mostly without any social security cover. 23 . To that extent imposing social and rural obligations by insurance regulator (IRDA) is helping all insurance companies appreciate the vast untapped potential in serving the lower end of the market. can insure a significant percentage of the poor. Serving lowincome people who can pay the premium certainly makes a sound commercial sense to insurance providers. operating with commercial considerations. Although the current reach of ‘rural-insurance’ is limited. the early trend in this respect suggests that the insurance companies. both public and private.

flexibility in premium collection. • Grassroots level Governance. Health. • From digital divide to digital opportunities for sustainable development and economic growth at grassroots level. • Why not give a choice to the potential NREG Candidate – to go for the employment guarantee or sign up for the skill initiative. Given irregular and uncertain income stream of the poor. it is becoming increasingly clear that rural insurance needs a further push and guidance from the regulator as well as the government. Reaching the Unreached through Public services by offering various products which covers more risk in less premium or also more coverage in less premium set according to the rural areas and an initiative should be taken by insurance companies to educate the need and purpose of insurance as follows: Reaching the Unreached through Public services. health insurance policy etc. flexibility in premium collection is needed to extend the rural insurance net far and wide. encouraging rural insurance. Education. which suggests the regulator’s bias towards insurer-agent model. personal accident. two areas in which having explicit provisions would aid the development of rural-insurance are: one. poverty reduction and sustainable resources use. 24 . insurance companies are playing a significant role in improving the lives of poor households. and two. Even so. • Sustainable development of SMEs – Reducing spatial disparities and enhancing opportunities for employment and development. • Sustainable Development and Earth-care Policies in the areas of: water. • Broadband services over a technology neutral platform in rural and remote areas. Moreover. Agriculture and Rural development. and Biodiversity. • Poor to be the real target of secular public policies. • Improve governance. • Moving towards “ONE INDIA” to usher in a remarkable change in the life of the common man. • Fostering agricultural growth. • By giving the knowledge about different products of insurance such as householders policy. Energy. • Village cluster Development through Sustainable societies in a Viable Rural Space.However. education and healthcare through ICT. • Promote Yeshasvini under the NREG Scheme. IRDA has already come up with the concept note on rural insurance.

New Delhi. 19 February 2005. • Rural electrification through renewable sources. AgRIS. talisman Corporation. 25 . 12 October 2005. • Creating the right Human resources to reach heights in food processing. Jeffrey D. 6 October 2005. Digital SMEs. Girish Krishnanmurthy (2005): “CIM for the Small Sector”. Montek Singh Ahluwalia (2005) : “While delivering speech at the Forum of Financial Writers. published in The Economic Times. etc). 4. Sachs (2005) : “ The Democratization of Aid”. published in The Economic Times. 17 February 2005. eCooperatives. • Digital Network Farmers (AGRISNET.• Dairy Cooperatives in every village for procurement of milk to enable the farmers to enhance their income. 2. New Delhi as published in the Times of India. Shubhasis Gangopadhyay (2005): “Improving Productivity & Earnings”. 3. He is the Country Head. • Mainstreaming ICT for Grassroots level Planning for economic and social Development (DISNIC). The Economic Times. India. REFERENCES 1. AGMARKNET.

The Economic Times. he is also a Member. (2005) : “the Fortune at the Bottom of the Pyramid : Eradicating Poverty through profits” 26 .K.(2005): Charting a New Course for India”. jai singh Road. new Delhi – 110001. 8. OUP. Prahlad C.5. A. 7. The Economic Times 1 October 2005. YMCA Library Building... National Advisory Council. Bharat Dogra 92005) : “Gandhii’s ideas are not outdated” . 15 October 2005. Joan Martinez-Alier (2005) : “Environmentalism of the Poor – A Study of Ecological Conflicts and valuation”. Shiva Kumar. 6.

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