IRDAI vide Circular dated February 06, 2024 issued an Exposure Draft on ‘Insurance Regulatory and Development Authority of India (Rural, Social Sector and Motor Third Party Obligations) Regulations, 2024’ (Exposure Draft) to specify minimum rural and social sector business that the insurers are required to underwrite under section 32B and 32C of the Insurance Act, 1938 and minimum third party motor insurance business that the insurer carrying on general insurance business is required to underwrite under section 32D of the Insurance Act, 1938.
The proposed draft intends to repeal the following extant prescriptions:
1. IRDAI (Obligation of Insurer to Rural and Social sector) Regulations, 2015
2. IRDAI (Obligation of Insurer in Respect of Motor Third Party Insurance Business) Regulations, 2015
The proposed Regulations would become effective from 1st April, 2024 and shall remain in force for a period of 3 (three) years thereafter unless reviewed or repealed earlier
Major highlights/proposed changes in the existing prescriptions applicable for general insurers:
A. Rural Sector
1. The unit for measurement of rural sector obligations will now be gram panchayat ( earlier it was GDPI ).
2. For general insurers, number of individual dwellings under fire segment and number of vehicles under motor insurance segment will be counted.
3. For general and SAHI companies, number of lives separately under health insurance and personal accident will be taken into consideration for achieving the obligations.
4. General Insurance – The minimum number of dwellings under fire insurance and vehicles under Motor (Comprehensive and TP) to be covered by all general insurers in all gram panchayats in the country shall be as follows:
Sr. No
Financial year following notification of Regulations
Minimum number of dwellings to be covered under Property insurance by all general insurers in all gram panchayats in the country
Minimum number of vehicles to be covered under motor insurance (Comprehensive and TP) by all general insurers in all gram panchayats in the country
1
First Year
30% dwellings in each gram panchayat subject to minimum of 25,000 gram panchayats driven by Lead Insurer
30% of vehicles in each gram panchayat subject to minimum of 25,000 gram panchayats driven by Lead Insurer
2
Second Year
40% dwellings in each gram panchayat subject to minimum of 50,000 gram panchayats driven by Lead Insurer
40% of vehicles in each gram panchayat subject to minimum of 50,000 gram panchayats driven by Lead Insurer
3
Third Year
50% dwellings in each gram panchayat subject to minimum of 75,000 gram panchayats driven by Lead Insurer
50% of vehicles in each gram panchayat subject to minimum of 75,000 gram panchayats driven by Lead Insurer
5. Health Insurance – The minimum number of lives under health and personal accident insurance to be covered by all general and SAHI insurers in all gram panchayats in the country shall be as follows:
Sr. No
Financial year following notification of Regulations
Minimum number of lives under health insurance to be covered by all general insurers including SAHI in all gram panchayats in the country
Minimum number of lives under personal accident insurance to be covered by all general insurers and SAHI in all gram panchayats in the country
1
First Year
30% of lives in each gram panchayat subject to minimum of 25,000 gram panchayats driven by Lead Insurer
30% of lives in each gram panchayat subject to minimum of 25,000 gram panchayats driven by Lead Insurer
2
Second Year
40% of lives in each gram panchayat subject to minimum of 50,000 gram panchayats driven by Lead Insurer
40% of lives in each gram panchayat subject to minimum of 50,000 gram panchayats driven by Lead Insurer
3
Third Year
50% of lives in each gram panchayat subject to minimum of 75,000 gram panchayats driven by Lead Insurer
50% of lives in each gram panchayat subject to minimum of 75,000 gram panchayats driven by Lead Insurer
B. Social Sector
1. The unit of measurement for social sector continues to be number of lives for all insurers.
2. The number of lives to be covered under social sector obligation have been increased as follows:
Sr. No
Financial Year following notification of Regulations
Minimum percentage of lives to be covered as a proportion of total lives covered
1
First Year
20%
2
Second Year
25%
3
Third Year
30%
3. Insurance business pertaining to Government social security schemes such as Pradhan Mantri Awas Yojana, Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJY), etc. where total/ partial premium is paid by the Government, with/without any contribution from the members/ beneficiaries covered shall be considered for rural and social sector obligations.
4. Insurance policies covering lives issued to BPL cardholders, MNREGA cardholders, eShram cardholders, DBT beneficiaries, Ayushman Bharat cardholders, Pradhan Mantri Mudra Yojana beneficiaries, Jan Dhan account holders, beneficiaries of PM Kisan Samman Nidhi Yojana, PM Viswakarma Yojana, Pradhan Mantri Jan Arogya Yojana, etc would qualify for Social Sector Obligation.
5. Micro insurance policies issued are eligible to be reckoned for Social Sector obligations.
6. Insurance policies sold through Bima Vahaks will be counted towards rural and social sector obligations
C. Motor Third Party Obligations
1. With regard to motor third party insurance, the obligations are specified for goods carrying and passenger carrying vehicles .
2. Every General Insurer (other than stand-alone health insurers and ECGC) shall underwrite the following minimum percentage of statutory Motor Third Party Liability insurance of Goods Carrying and Passenger Carrying Vehicles in 3 years:
Sr. No
Financial Year following notification of Regulations
Minimum percentage of statutory Motor Third Party Liability insurance number of Goods Carrying & Passenger Carrying Vehicles
1
First Year
20% increase over total number of goods carrying & passenger carrying vehicles covered in last financial year or 10,000 vehicles in each category, whichever is higher
2
Second Year
20% increase over total number of goods carrying & passenger carrying vehicles covered in last financial year or 10,000 vehicles in each category, whichever is higher
3
Third Year
20% increase over total number of goods carrying & passenger carrying vehicles covered in last financial year or 10,000 vehicles in each category, whichever is higher
3. Coverage of new Goods Carrying and Passenger Carrying vehicles shall not be counted towards Motor TP obligations.
4. Motor TP obligation fulfilment shall be contributed by renewal of the existing vehicles and uninsured vehicles that are insured provided the gap in insurance is at least 30 days.
5. Every new insurer shall underwrite a minimum of 10,000 goods carrying and 10,000 passenger carrying vehicles in the first financial year of its operations.
6. Any health, re-insurance, agriculture, export credit guarantee insurer is exempted from the applicability of section 32D of Insurance Act, 1938
D. Option to fulfill the obligations
1. The insurers are allowed to buy and sell the obligations from out of the surplus to the extent of 20%;
2. The insurer who has sold the obligations will continue to be the insurer under the policy and shall be responsible for servicing the insurance policy and settling claim under it
E. Action in Case of Default:
1. The Authority may, at any time, by an order in writing, cause an inspection of any Insurer to be undertaken and who shall submit a report on the compliance of these Regulations.
F. All operational requirements will be specified by the Authority in the Master Circular.
A copy of the Exposure Draft along is attached herewith for your ready reference.
Source category: IRDAI
Attachments
- /2024/347_2024_02_06_-_Notice_-_Exposure_Draft_IRDAI_(Rural,_Social_Sector_Motor_Third_Party_Obligation.pdf
- /2024/347_2024_02_06_-_Exposure_Draft_IRDAI_(Rural,_Social_Sector_Motor_Third_Party_Obligations)_Regula.pdf
- /2024/347_06_Feb_2024_Format_for_receipt_of_comments_on_Exposure_Draft_Annexure_B_RUSO.pdf
Comments are closed