Irda Orders Review Of Rural & Social Sector’s Definition

Posted: Wednesday, Apr 10, 2002 at 0000 hrs IST
Updated: Wednesday, Apr 10, 2002 at 0000 hrs IST

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New Delhi, April 9: : Even as they compile their business figures for 2001-02, private life insurers are not finding it easy to fulfil their rural and social sector obligations. The insurance regulator has therefore commissioned a review of the definition of rural and social sector, though companies will have to adhere to the norms for the present. At a meeting of the life insurance general council here on Tuesday, a representative body of life insurers, reviewed new business performance. The council also decided to examine the issue of rebates being offered to consumers, a practice frowned upon by regulators all over the world.

“Life insurance companies has asked for re-examination of the definition of rural areas. We have asked the Indian Institute of Management, Bangalore, to prepare a report in this regard,” HO Sonig, member, of the Insurance Regulatory and Development Authority (Irda) and chairman of the council, told newspersons after the meeting. IIM-B has circulated a report on rural norms among the insurance companies and would be collating the feedback on behalf of the regulator. The definition of rural area may be reviewed thereafter, he said. According to Irda norms, life insurance companies must sell 5 per cent of their total policies in rural areas in the first year, 7 per cent in the second year, 10 per cent in the third year, 12 per cent in the fourth year and 15 per cent from the fifth year onwards. Mr Sonig added that all new players indicated that they had fulfilled their business targets as per the provisional figures. However, he said it would not be fair to comment till the figures were submitted to Irda.

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