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What is Rural Insurance
‘Rural insurance: Need and potential’ has highlighted that the Government should pay serious attention to the rural areas. In fact, Life Insurance Corporation of India (LIC) stipulates that a considerable percentage of its business should be from rural areas. And it has some social security schemes covering the rural and urban poor, landless labour, and so on.
Yet it was not possible for it to penetrate into the interiors to tap the rural business. Two main reasons were the cost involved in servicing, and the policies not meeting the credit requirements of the farmers. They were accustomed to old methods of borrowing, chitties, etc.
Crop insurance was also a failure because of misuse and false claims. And agents as well as insurers are not interested in policies of small sums assured and premiums. So, the Insurance Regulating Authority should insist that the business of every insure r should have a particular percentage of rural business and of small policies.
Rural insurance: Need and potential
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 ne glect of the rural areas vis-a-vis 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.
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.
All these assets need to be protected from damage/loss, natural or manmade. Thus, the rural areas offer enormous opportunities for committed private insurance companies in both life and non-life insurance schemes.
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 as well.
Valuable data and information on rural areas has been available on the rural areas through the publications/surveys of the Central Statistical Organisation, 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 devel opment.
Besides, the village profile available with each of the branches of nationalised/public sector banks contain exhaustive data on the population, cultivating households, categories of farmers, classification of workers, livestock, cropping pattern, farm eq uipment and machinery and so on.
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 Top Providers |
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ICICI Prudential Life |
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SBI Life Insurance |
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Life Insurance Corp. |
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Bajaj Allianz Insurance |
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United India Insurance |
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