Académique Documents
Professionnel Documents
Culture Documents
1. INTRODUCTION
1.2 RURAL INSURANCE
DEFINITION :
The report Rural Texas in Transition states that factors used to determine the
"rural" or "urban" status of an area include population, population density,
"occupational opportunities," "relative presence of agriculture," sizes of nearby
cities and towns, and "quality of life."
The IRDA guidelines define a Rural sector as a place which as per the latest
census has:
The total population of not more than 5000.
The density of population of not more than 400/sq.km. and at least 25 % of
the male population is dependant on agriculture as source of livelihood.
A change in the definition of what constitutes `rural' has given some leeway
for insurance companies to get in the mandatory percentage. In August 2004,
Insurance Regulatory and Development Authority altered the definition,
aligning it with the census definition of `rural'.
T.Y.BBI 1
RURAL INSURANCE
The census does not define rural area. It defines only an urban area. And by
inference, what is not urban is a rural area.
The erstwhile IRDA definition of rural areas included all areas with a
population of less than 5,000, with a density of population less than 400 sq km
and where at least 75 per cent of the male working population was engaged in
agricultural pursuits. The IRDA had amended the definitions earlier in 2002 to
bring down the requirement stipulating that at least 25 per cent of the
population had to be engaged in agricultural pursuits.The revised definition
has widened the market.Mr. Vivek Khanna, Director, Marketing, Aviva Life
Insurance Company, said, "A couple of thousand villages would now be
brought under the fold. The earlier definition meant that only some remote
villages could be tapped. And there is no ambiguity now."
RURAL SECTOR.
India lives in villages. There are more than 5 lakh villages, with population of
5000 or less, with a total population of nearly 75 crores. But nearly 25% of the
rural population is below the poverty line. The people in these areas are
scattered far and wide. Hence, to contact these people, one has to travel long
distances along roads that are very well constructed. There may not be any
convenient places for visitors to stay or to eat food in these areas. It would,
therefore, probably be more profitable for insurance companies to concentrate
their efforts on the urban areas.
To combat this tendency, the Insurance Regulatory and Development
Authority has made it mandatory for every insurance company in India to
undertake a specific percentage of life insurance business and general
insurance business in rural and social sector, as specified in the official gazette
T.Y.BBI 2
RURAL INSURANCE
by the Authority.
Providing insurance to the majority of the Indian population, which lies
in the rural areas, scattered over a wide geographical, socio-cultural and
linguistic landscape, is a major challenge for both the public and the private
insurers.
There is a great difference in the rural and urban people’s mindset, their
level of education, professions and incomes. Rural people may prefer low
premium and maximum risk coverage and may prefer compensation upto the
actual amount of loss. In urban areas people may demand maximum
compensation and for that they might be willing to pay high premium.
There lies a great potential in the rural insurance market where the
penetration of the insurance players has been low. In rural areas insurance is
often perceived as an additional burden rather than a means to combat risk.
There is great potential for expanding business in rural areas as most of the
Indian population lives in rural areas. While most of the insurers may find it
unattractive to tap the rural business, it should be understood that relatively
smaller amount of policies will be compensated by a larger number of policies.
Rural insurance business should be looked upon as an opportunity and not an
obligation.
Opportunities for rural business can be considered in terms of the
gigantic population of India of which 72 per cent resides in the rural areas and
majority of them are uncovered. With the current declining trend in interest
rates, insurance products can become good investment avenues, which give
good returns and can cover lives and assets. However, low literacy levels, lack
of insurance awareness, uncertainty of agricultural incomes, low incomes of
landless laborers and wage earners, their poor health conditions, traditional
savings habits where there is more preference for real assets, superstitions, low
T.Y.BBI 3
RURAL INSURANCE
earnings and credibility can really be the threats to the insurers trying to capture
rural business. Hence some special products need to be designed for them.
Compared to the organized sector, the unorganized sector constitutes
major section in the Indian population, which includes cultivators, agricultural
laborers and workers who work in the unorganized manufacturing and service
industries and also includes self-employed. Around 30 percent of the Indian
population still lives below the poverty line and cannot afford even their basic
necessities. The Government of India and the LIC have launched group
insurance schemes for these downtrodden sections of society such as landless
agricultural laborers, beneficiaries of the IRDP program, etc. One such scheme
is the Rural Group Insurance Scheme 1995.
There are some other schemes introduced by the government in association
with LIC of India such as Janashree Bima Yojana, Krishi Shramik Samajik
Suraksha Yojana 2001, Shiksha Sahayog Yojana. Under these schemes the
sum covered was very low and the claim amount was very meager.
Involvement of middlemen, bureaucracy and red-tapism were the major
negative factors in this regard.
Indian agriculture is highly dependent on monsoon, and crops are
exposed to several risks. In this direction the NAIS – National Agricultural
Insurance Scheme was introduced in year 2000 which replaced the existing
comprehensive Crop Insurance Scheme (operating since 1985). NAIS was
primarily aimed at covering all food crops, oilseeds and annual commercial
/horticultural crops. 11 crops are covered under NAIS. For Small and Marginal
Farmers, 50% subsidy was given (which was equally shared by the Center and
respective State governments). On these lines, a Pilot Seed Crop Insurance
Scheme was introduced in the same year to protect the seed breeders. All public
sector general insurance companies also provided livestock insurance.
T.Y.BBI 4
RURAL INSURANCE
NABARD and the public sector general insurance companies have set up the
Agricultural Insurance Corporation of India Ltd., which will take care of
insuring farms, agricultural properties, cattle, poultry, etc. The estimated size
of the agricultural insurance business is around Rs.1000 crores and it is
expected to grow 10 times in the years to come. In order to avoid possible
negligence by the insurers towards rural markets (the new players in
particular), IRDA formulated the “Obligations of Insurers to Rural Social
Sectors” and it is worth mentioning that the performance of both life and the
general insurers has been much above the required level.
RURAL INSURANCE.
No doubt the vast potential of the rural market in insurance remains untapped.
Only the Life Insurance Corporation of India with its large number of branch
offices and network of agents throughout the country is able to do a reasonable
percentage of business in rural areas.
However, to tap the full potential the insurance companies will have to
introduce new products to suit the needs of the people, combining it with
facilities to meet their short-term requirements and so on.
OBJECTIVES
1 To study the insurance provided to rural areas by insurance sector.
2 To compare the urban and rural insurance services provided by
insurance sector.
3 To analyze the problems and challenges faced by the insurance
companies in providing the rural insurance to the rural population.
T.Y.BBI 5
RURAL INSURANCE
INSURANCE has thus far been mostly city-oriented. But things are
happening in the rural areas where human life and income-generating rural
assets need protection, and there is tremendous scope for developing insurance
business. This shows up the gross neglect of the rural areas vis-a-vis insurance
T.Y.BBI 6
RURAL INSURANCE
cover, though since the late-1960s, a silent economic revolution has been on
in the villages.
Now that the insurance sector is open to the private sector and foreign
companies, the Government should pay serious attention to covering the rural
areas.While it is true that access to insurance cover depends on the
literacy/awareness levels and assured income, well-planned and organised
efforts by committed private sector companies can yield rich dividends from
the rural areas. This is because:
(1) A large number of rural districts have witnessed significant growth and
prosperity;
(2) Access to reliable and authentic data and information has improved
considerably, which can enable quick and correct decision-making;
(3) There are specific functionaries and agencies in the rural areas which can
help explore and exploit insurance business in the untapped rural market.
T.Y.BBI 7
RURAL INSURANCE
SUITABILITY
This policy is suitable for insuring pump sets used for agricultural purposes.
Same policy is issued to cover pumpsets used for domestic purposes.
SALIENT FEATURES
• The policy covers centrifugal pump sets which are either electrical or
diesel driven and submersible pumpsets upto 25 HP capacity.
However, losses due to normal wear & tear willful or gross negligence, pre
existing faults, manufacturing defects covered by guarantee, transportation and
re-erection charges are not covered.
T.Y.BBI 8
RURAL INSURANCE
PREMIUM
• Group discount is allowed if more than 250 pumpsets are covered under
single policy. Premium is loaded by 50 % for submersible pumpsets over
10 years old.
AGRICULTURAL STATISTICS
It rightly points out that agricultural statistics more often mislead, rather than
inform. There is no doubt that official published information should be
authentic and accurate. The timely collection and dissemination of correct data
on acreage, input supplies, pest attacks, rainfall, agricultural production,
quality of markets, etc., are essential for clearing uncertainties related to
T.Y.BBI 9
RURAL INSURANCE
demand, supply and prices, as they affect the producers, consumers and
speculators. Decisions on sourcing, inventory, processing and marketing, cash-
flow management, etc., are critically dependent on reliable information.
Cotton, groundnut and sugarcane are found in Kerala, for instance, only in
certain areas of particular talukas in a few districts.
7 Nearly 20% of all farmers in rural India own a Kissan Credit Cards. The
23 million credit cards issued till date offer a huge data base and
opportunity for insurance.
T.Y.BBI 10
RURAL INSURANCE
2. CATTLE INSURANCE
Cattle Insurance was governed under Market Agreement as devised by
GIC and the rates, terms, conditions etc. all were applicable to all the four
Insurance Companies. However, w.e.f May 2003, it is no longer under Market
Agreement.
This policy covers indigenous cross bred and exotic cattle owned by
T.Y.BBI 11
RURAL INSURANCE
T.Y.BBI 12
RURAL INSURANCE
T.Y.BBI 13
RURAL INSURANCE
T.Y.BBI 14
RURAL INSURANCE
T.Y.BBI 15
RURAL INSURANCE
T.Y.BBI 16
RURAL INSURANCE
craft & aerial devices or articles dropped there from, impact damage,
earthquake, storm, tempest, cyclone, flood and inundation, volcanic
eruption and other convulsions of nature. Comprehensive cover in
addition to basic cover encompasses death due to diseases except those
caused by bad management and nutritional deficiencies.
BENEFITS:
1 In the event of a fortuitous event resulting in a loss, the basis of loss
settlement will be the sum insured fixed as follows:-
Sum insured = Number of seeds released X expected survival rate (%)
X expected average body weight in grams X input cost per Kg.
2 For losses upto 4th fortnight stage, maximum liability shall be restricted
to 80% of the input cost only. From 5th fortnight onwards claims are
admitted as a percentage of biomass.
3 Deductions towards salvage are made.
4 When the percentage of loss at any stage equals or exceeds 80% of the
total shrimps / Prawns insured, it will be treated as total loss.
PREMIUM:
Premium rates have been fixed as follows:-
Section – I (Basic) Section – II
(Comprehensive)
b)Others 2% 6%
REQUIREMENTS:
1 The farm should obtain statutory license for setting up conducting
aqua – culture operations in the area as per Government legislation.
T.Y.BBI 17
RURAL INSURANCE
T.Y.BBI 18
RURAL INSURANCE
T.Y.BBI 19
RURAL INSURANCE
attaining the age of 15 she will get a fixed lumpsum amount either to pursue
her own chosen profession or carrying on her higher education or to settle
down if she gets married. The stipend payable till 6 years is Rs.1200/- per
annum to meet the requirements of the child. From 6 years to 12 years a stipend
of 1200/- is paid as scholarship and from 12 years to 18 years the stipend is
doubled to Rs.2400/-. The sum insured of Rs.25, 000/- which accrues to the
child on accidental death of one or both the parents is credited into a special
fund called orphans girl child fund, which was managed and multiplied by GIC
ASSET MANAGEMENT COMPANY. The present arrangement is with
Bank of India. All designated branches of Bank of India will extend the
services.
8. ANIMAL DRIVEN CART/TONGA
This cover is divided into four sections:
Section 1 – Loss or damage to the cart/Tonga/coach whilst in transit by road
rail or inland waterways by accidental external means, fire, explosion,
lightning, storm, tempest, flood, inundation, earthquake, burglary or theft,
malicious damage, riot and strike.
Section 2 – This section provides indemnity against death or permanent total
disablement of the animal used for pulling or driving the carriage due to
accident caused whilst attached to the cart/tonga/coach.
Section 3 – Third party liability caused by cart/tonga/coach insured including
passengers liability upto Rs.5000/- per accident and Rs.10, 000/- for all
accidents in a year with certain standard exclusions.
Section 4 – This section indemnifies the driver against death or loss of sight of
two eyes or loss of use of two hands or loss of use of two feet or loss of sight
of one eye and loss of use of one hand/foot or permanent total disablement –
Rs.10, 000/- and loss of use of one hand/foot or loss of sight of one eye – Rs.5,
T.Y.BBI 20
RURAL INSURANCE
T.Y.BBI 21
RURAL INSURANCE
3. Sugarcane 1.25 %
T.Y.BBI 22
RURAL INSURANCE
REQUIREMENTS:
Inter cropping may be done only if it does not interfere with normal growth
and health of the trees.
No smoking or cooking shall be allowed in the open fields and within 30m
of the property insured. Dry vegetation & leaves should be removed
periodically.
RECOMMENDATIONS:
Plantations are exposed to a variety of perils ranging from pests to forest fires.
It becomes very difficult for the farmer to come out of loss in the absence of
comprehensive insurance cover. It is for this reason, this insurance policy is
devised which is very popular and hence recommended.
SUITABILITY:
T.Y.BBI 23
RURAL INSURANCE
SALIENT FEATURES:
This policy covers only plants whilst growing in the farm / green house / Poly
house against total loss or damage due to
2. Lightning.
5. Earthquake.
BENEFITS: The Policy covers the input costs incurred till the time of loss.
These are the recurring expenses incurred to raise / maintain the plants such as
soil preparation, fertilizer, manure, cost of plants / seeds/ saplings/ cost of
planting /sowing & Pruning, pesticides, insecticides, irrigation, Labour charges
and other costs specifically covered. Claims exceeding 50 % of the total sum
insured per hectare or Rs.1000/- which ever is less only shall be admitted. Each
and every claim is subject to an excess of 20 %.
PREMIUM: Premium
is charged on the sum insured opted as follows.
T.Y.BBI 24
RURAL INSURANCE
REQUIREMENTS:
At the time of taking out insurance, the Plants should be at least one month
old after plantation / transportation i.e.; the plants should be well established
in the soil.
RECOMMENDATIONS:
SUITABILITY: This policy is suitable for the agriculturist using the lift
irrigation or sprinkler installation for cultivation.
T.Y.BBI 25
RURAL INSURANCE
5. Theft.
BENEFITS: On the occurrence of a loss, claims will be paid for the cost of
restoration to the extent of sum insured set against each item.
T.Y.BBI 26
RURAL INSURANCE
mitigate the losses. This policy comes to aid in such situations and is therefore
recommended.
T.Y.BBI 27
RURAL INSURANCE
Evaluation depends upon the age of the animal. Animals are identified by
means of small brass buttons ear tags.
16. HORSE, MULE, DONKEY, PONY, YAK INSURANCE
The Coverage is as per Standard Cattle Policy. However the age group
is restricted to 2 yrs to 8 yrs.
T.Y.BBI 28
RURAL INSURANCE
The best example of growth of rural business can be seen from the below
statistical data showing LIC’s growth performance.
LIC’S RURAL BUSINESS
Policies Policies
Absolute 1,07,91,316 35,33,694
As % of Total
55.53 18.18
business
(INDIVIDUAL ASSURANCE FOR 2000-2001)
The above table clearly reflects LIC’s efforts in spreading rural insurance
business in villages across the country. LIC had not only covered the number
of policies as per IRDA definition but also sold more policies doing a surplus
business of around 38%. Due to this increase there has been a rapid growth in
number of policies taken by rural customers thereby increasing the business.
This can be shown with the help of the chart given below.
120
107.91
100 97.04
81.23
80
68.4
60 60.33
20
0
1996- 1998- 2000-
97 99 01
T.Y.BBI 29
RURAL INSURANCE
Subsequently LIC experienced a rise in the sum assured i.e claim settlement.
This can be shown with the help of the diagram.
60,000.00 58,781.59
50,000.00
44,168.19
40,000.00
35,372.94
30,000.00 27,550.69
24,278.73 S.A. (Rs. In Cr.)
20,000.00
10,000.00
0.00
1996- 1997- 1998- 1999- 2000-
97 98 99 2000 01
T.Y.BBI 30
RURAL INSURANCE
If it means that farmers here are unable to keep their prices as low as huge
multinational agricultural conglomerates do, there are reasons for that that has
nothing to do with farmers not being productive: one is, the conglomerates
usually end up exerting a quasi-monopolistic hold on the market; another is,
foreign agriculture is heavily subsidised. Then there’s the semantic question.
What does productive mean? Productive for whom? By what standard? If we
are a capital-poor, labor-rich country, using more people in agriculture is not
unproductive; it’s the best use of your resources. Using high-tech equipment
which does away with people is, in those terms, a highly unproductive use of
your resources.
Farm issues
Though less than 25 per cent of GDP is contributed by the farm sector, it
employs more than 70 per cent of the workforce.
T.Y.BBI 31
RURAL INSURANCE
The Andhra Pradesh Government will extend crop insurance scheme to all
districts in the State, besides ensuring the availability of Rs 26,000 crore as
loans to the farmers in the next financial year.Instead of taking mandal as a
unit for crop insurance, a village would now be taken as a unit to ensure proper
implementation. The scheme, which is being implemented in 10 districts
currently, will be extended to all districts in the State. Under the crop
insurance programme, over Rs 376 crore has been paid to the farmers in
Anantapuram district alone.
Referring to the agricultural productivity in the State, Dr Reddy said there has
been on a steady rise. High yields have been reported from Adilabad,
Karimnagar, Kurnool, Anantapur, Krishna, Guntur and West Godavari
districts.
“Compared to last year, the average rice production per hectare has gone up
to 3,000 kilos from 2,631 kilos, while maize has improved to 4,247 kilos from
2,398 kilos,” he said.
But more than that, it is encouraging cross-breeding of cattle, says Mr. Pranav
T.Y.BBI 32
RURAL INSURANCE
Prasad, Head Rural and Agriculture Business Group, ICICI Lombard. “Cattle
farmers are bringing good breeds from other regions to their places and are
also cross breeding, now that they are aware of livestock insurance,” he says.
ICICI Lombard, which has insured nearly one lakh cattle in the three years
since it began this venture, sees its livestock business expanding, including
extending group insurance for cattle.Currently, the firm extends livestock
insurance to Andhra Pradesh, Chhattisgarh, Orissa and Haryana covering 70
districts. The insurance firm makes use of veterinarians for settling claims and
feels it has control over fraud claims.
WEATHER INSURANCE
Overall, the company realizes Rs 200 crore as livestock insurance currently.
Mr. Prasad says ICICI Lombard aims to insure one million cattle by 2009-10.
Before that, it plans to have at least 2.5 lakh cattle insured during the next
fiscal.
T.Y.BBI 33
RURAL INSURANCE
Lombard now has enlisted 2.5 lakh farmers for this policy. About three lakh
hectares have been covered by this, Mr. Prasad says.
The weather insurance ensures that farmers are compensated through the
policy in case weather plays truant with the crop or its output. Different
parameters have been set up and the weather index is drawn up district-wise
through a tie-up with National Collateral Management Services, an arm of
NCDEX. The index monitors rainfall during sowing and temperature during
harvest.
In case the policyholder is unable to pay the 2nd annual premium, the plan
will still offer a full cover for 18 months or 48 months from the due date of
unpaid premium for the five-year or the 10-year policy plan respectively. In
addition, tax benefits can be availed as per Section 80C of the Income Tax
Act, 1961.
Bert Patterson, managing director, Aviva Life Insurance, India said, "Aviva
T.Y.BBI 34
RURAL INSURANCE
has been a serious player in the micro insurance arena. We have been
associated with BASIX since 2002 and together we have insured lives of many
in the social sector. With the launch of Grameen Suraksha for BASIX
customers, we hope to increase our reach and provide the benefits of life
insurance to maximum number of people in rural and social sector. Aviva
India has covered close to 900,000 lives in the social sector in association with
BASIX and other micro insurance organizations."
Under the new plan, the premium is calculated based on the sum assured and
age (18 to 45 yrs) of the policyholder. The minimum sum assured is Rs 5,000
and the maximum is Rs 50,000. The policyholder also has the option of
surrendering the policy in which case the surrender value is then paid.
T.Y.BBI 35
RURAL INSURANCE
per year, ING Vysya is working out new strategies to reach its target of having
two million customers by 2010, Metzelaar said.
"We are looking at more banking and other types of financial institutions like
cooperatives and well-entrenched NGOs to reach out to more people to make
our services more attractive, efficient and affordable, particularly in the rural
areas," Metzelaar told IANS here.
As Vysya Bank has more of a retail presence in southern India, particularly
Karnataka and Andhra Pradesh, the insurance venture is scouting for a
possible partner that would help it broaden the market reach to other regions.
A study by the Foundation of Research, Training and Education in Insurance
(FORTE), a collaboration of the Federation of Indian Chambers of Commerce
and Industry (FICCI) and ING Insurance, has revealed that there is
tremendous potential for growth in the rural areas.
With only 11% of Indians covered by old age pension or provident fund
schemes and the lack of any social security or medical cover for an
overwhelming majority in the unorganized sectors, insurance is slowly
becoming need-based instead of a tax-saving measure, the FORTE study
observed.
Unlike their urban counterparts, the rural folks still have low awareness about
advantages of insurance cover for life and property, said sources in the
insurance industry.
"The challenge in the rural areas is to win more trust than in urban areas. For
this we need to have alliances with cooperatives, local banks and NGOs that
have the local expertise and reach," said Metzelaar.
In the last 2 yrs, ING Vysya Life Insurance's main concentration has been on
creating new markets in a country where a decades-old establishment like the
Life Insurance Corporation (LIC) enjoyed a monopoly as the sole provider of
T.Y.BBI 36
RURAL INSURANCE
Financial Institutions (FIs) and Insurance Companies can rope in about 200
million Rural Investors in their fold provided they design innovative savings
and loan schemes on lines of commercial banks and even post offices and
multiply their annual turnovers by disbursing agri, housing, personal and
education loans and easy insurance schemes at affordable rates to potential
aspirants, according to Associated Chambers of Commerce and Industry of
India (ASSOCHAM).
T.Y.BBI 37
RURAL INSURANCE
Apart from agri loans, FIs can lure rural investors for housing, personal, auto
and education loan. The public and private insurance companies can also
introduce affordable insurance schemes with their premium keeping at Rs.
500 to Rs.1000 per month. With this premium, the companies can design
schemes that can cover rural youth for at least Rs.50, 000-Rs.1 lakh for a
period of minimum 10 years.
Currently, only 8-10% rural households are covered under life insurance
schemes and remaining 90% can be targeted for these insurance schemes.
According to ASSOCHAM, rural youths, income has risen due to shifting of
its occupation from agriculture to non-farm agricultural income and it has
become an important facet of rural India. This income mainly comes from
T.Y.BBI 38
RURAL INSURANCE
In view of rural investors rising income, they have now more buying capacity
than before. The FIs can lure them for renovation and modernization of their
housing at 6-7% rate compared to 10-12% rate in urban India. Rural masses
are in need large sums for the marriages in their families and other close
relations and personal loan at affordable rate will be an ideal choice for them.
Rich farmers who have benefited from agriculture, farming, dairy processing
& other sectors are using tractors, jeeps, tempo etc. for loading and unloading
their crops and other products to traders. These farmers should be targeted
for Auto Loans and the repayment of these loans should be between 6-7 years
with easy interest rates.
T.Y.BBI 39
RURAL INSURANCE
Being an agrarian economy again there are immense opportunities for the
insurance companies to provide the liability and risks associated in this sector.
The Paper found that the rural markets are still virgin territories to a great
extent and offer exciting opportunities for insurance companies. The surest
path to success is to judge and measure the requirements of the people
correctly and offer a scheme that they would be able to afford.
ASSOCHAM has therefore felt that this is the opportune time for the public
and private insurance companies to enter into rural India in a big way by
introducing easy premium schemes in life insurance and for agri insurance,
auto insurance etc.
To reach the rural investors, ASSOCHAM has suggested that the FIs and
insurance companies should interact with local government/development
agencies, as well as Panchayats and identify various products for the
preparation of the Service Area Credit Plans in the rural areas.
They can also organize local groups like Village Development Councils and
Farmers Club and these bodies should act as a bridge between them and the
rural investors and ensure that the products developed match the demand of
local clients. These bodies should have rural educated workforce which will
be used for better delivery and distribution of small products by adequate
awareness. Rural women could also be included into distribution network and
T.Y.BBI 40
RURAL INSURANCE
While public investment in agriculture has declined to 16.2 per cent, the rural
banking system has been encouraging farm development through provision of
credit facilities for production of crops including horticulture, plantation,
forestry; purchase of farm equipment; livestock and fish farming; irrigation
facilities and installation of diesel engines, and so on.
With enhanced incomes, and further supplemented by bank credit, the rural
population is acquiring consumer durables, constructing houses, purchasing
vehicles, computers, and so on.
This will, in turn, help create more that would have direct impact on rural
development and the country's economic growth, in general. In fact, insurance
in the farm sector should benefit from the advances of science and technology
T.Y.BBI 41
RURAL INSURANCE
as well.
LIC in the last decade has evolved a number of products which, however, do
not suit the needs of the rural areas. Similarly, the four GIC subsidiaries have
also been providing insurance cover for specific kinds of assets owned by
rural households through bank credit. But more has really put in the required
marketing effort in the villages. The claim lodgement and settlement
procedure is time-consuming and cumbersome. Cattle insurance under the
government-sponsored Integrated Rural Development Programme and crop
insurance (till now covering banks' loans) have not met with the expected
results.
Valuable data and information on rural areas has been available on the rural
areas through the publications/surveys of the Central Statistical Organization,
National Sample Surveys, National Council of Applied Economic Research,
and so on. From 1989, the National Bank for Agriculture and Rural
Development has been formulating Potential Linked Credit Plan, and the Lead
Bank has been the Annual District Credit Plan that give considerable insights
into the Government's plans for farm and rural sector development.
Besides, the village profile available with each of the branches of nationalized
/ public sector banks contain exhaustive data on the population, cultivating
households, categories of farmers, and classification of workers, livestock,
cropping pattern, farm Equipment and machinery and so on.
There are more than 1,75,000 rural credit outlets in addition to the offices of
the District Rural Development Agency, the District Industries Centre, the
District Development Manager of nationalised banks and Lead District
Manager of the Lead Bank. All these institutions and agencies can offer
T.Y.BBI 42
RURAL INSURANCE
to build their business in the urban areas, there is a hitherto untapped potential
for business in the rural areas which can be exploited.
The Centre and the State governments must encourage private and
foreign insurance companies to enter the rural areas, and provide protection
to rural assets from damage and loss due to natural and man-made calamities.
For this purpose, reasonable and need-based concessions/relief’s in taxations
and subsidies required infrastructural facilities and administrative support
must be extended, at least for ten years. The government may consider
appointing an Expert Committee on Rural Insurance to work out the
modalities for private and foreign companies interested in entering the rural
areas.
8. BIBLIOGRAPHY
Books:
INDIAN INSURANCE INDUSTRY TRANSACTION AND
T.Y.BBI 43
RURAL INSURANCE
T.Y.BBI 44