Taking Insurance To Rural Doorstep

The IRDAI has suggested selecting several villages throughout the country as models of insurance so as to increase insurance penetration in rural areas. The concept was mooted by the IRDAI in a discussion paper on insurance in rural areas with a special focus on agriculture and allied activities, reported Press Trust of India.

"The concept may be implemented in a minimum of 500 villages in different districts of the country in the first year and increased to a minimum of 1,000 villages in the subsequent two years," the paper said.

The paper says that the choice of villages is to be made carefully, considering various relevant aspects and parameters in order to implement the concept successfully for a period of three to five years.

General insurers and reinsurers - Every general insurance and reinsurance company with an office in India needs to be involved in piloting the concept, and the efforts in selected villages need to be continued for a minimum period of 3-5 years so as to make the insurance benefits visible to the community.

The IRDAI paper says insurers can set up a dialogue with state governments and ministries that run various developmental programmes/schemes for farmers, rural and vulnerable sections of society. Insurance companies can integrate insurance with such programmes, it adds.

Target market - The discussion paper says the target segment consists largely of rural low-income households or individuals who have little savings and limited financial capacity.

The central government's initiative through Pradhan Mantri Fasal Bima Yojana (PMFBY) — the government-sponsored crop insurance scheme — has helped improve insurance protection for crops in recent years. However, a large number of crops and cropped areas remain outside the scope of the PFMBY and are still uninsured. These can be served through tailored indemnity-based /weather index-based products. Allied farm risks, MSMEs, agro-businesses, livestock and other personal insurance needs of the rural population are also largely unserved.

Lack of awareness, limited choice of insurance products, absence of a people-friendly and transparent claim settlement mechanisms, and a weak network of insurers, are some of the issues and challenges in advancing growth of rural insurance business.

The IRDAI has invited feedback from stakeholders on the proposal, with 17 May as the deadline for submissions.