IRDAI (Rural, Social Sector and Motor Third Party Obligations) Regulations, 2024

Background

The Authority has published IRDAI ( Rural, Social Sector and Motor Third Party Obligations) Regulations, 2024 , (‘RSM Regulation’) in the Gazette of India bearing F. No. IRDAI/Reg/4/198/2024 on March 20, 2024, after repealing the following prescription:

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 main objective of RSM Regulation is to specify the minimum rural and social sector business that the insurers are required to underwrite under sections 32B and 32C of the Insurance Act, 1938 and the 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.

Major highlights of the RSM Regulation are mentioned hereinunder:

A. Applicability: The RSM Regulation shall apply to the Insurers transacting General, Life, and Health Insurance business in India and shall come into effect from April 1, 2024, which shall remain in force for three years thereafter.

B. Rural Sector

1. The unit for measurement of rural sector obligations will now be gram panchayat ( earlier it was GDPI ).

2. Life Insurance – The minimum number of lives under individual and/or group policies to be covered by all Life Insurers in gram panchayats in the country shall be as follows:

The financial year following notification of Regulations

Minimum number of gram panchayats

Minimum percentage of lives to be covered in a gram panchayat

First Year

25,000

10%

3. For general insurers, a number of individual dwellings under the fire segment and the number of vehicles under the motor insurance segment will be counted.

4. For general and SAHI companies, a number of lives separately under health insurance and personal accident will be taken into consideration for achieving the obligations.

5 . 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

The financial year following notification of Regulations

Minimum number of gram panchayats

Minimum number of dwellings and shops to be covered in a gram panchayats

Minimum number of vehicles to be covered under motor insurance in all gram panchayats

1

First Year

25,000

10%

10%

6. Coverage of new vehicles shall not be counted towards Rural Sector obligations for general insurance.

7 . Health Insurance – The minimum number of lives under health and personal accident insurance to be covered by all general and SAHI (other than AIC and ECGC insurers in all gram panchayats in the country shall be as follows:

Sr. No

The financial year following notification of Regulations

Minimum number of gram panchayats

Minimum number of lives under health insurance to be covered in all gram panchayats

Minimum number of lives under personal accident insurance to be covered in all gram panchayats

1

First Year

25,000

10%

10%

C. Social Sector

1. The unit of measurement for the social sector continues to be a number of lives for all insurers.

2. The number of lives to be covered under social sector obligation has 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

10%

3. Insurance business pertaining to Government social security schemes such as 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 PM Kisan Samman Nidhi Yojana, Pradhan Mantri Awas Yojana, 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.

D. 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 1 year:

Sr. No

Financial Year following notification of Regulations

Motor Third-Party Insurance Market Share of General Insurers in the last financial year

Minimum percentage increase in the number of goods carrying, passenger carrying vehicles and Tractors (Miscellaneous segment) over last financial year separately for each category

1

First Year

Upto 2%

12.5%

2% – 5%

10%

5% – 10%

7.5%

More than 10%

5%

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 5,000 goods-carrying, 5,000 passenger-carrying vehicles, and 1,000 tractors in the first financial year of its operations.

6. Any health, re-insurance, agriculture, or export credit guarantee insurer is exempted from the applicability of section 32D of Insurance Act, 1938

E. Option to fulfill the obligations

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 claims under it.

F. Submission of Returns

Every insurer shall submit a return in the manner specified by the Chairperson, Whole-Time Member, committee of Whole-Time Member of the Authority.

G. Action in Case of Default:

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.

A copy of the RSM Regulation is attached herewith for your reference.

Source category: IRDAI

Attachments

• /2024/366_IRDAI_(Rural,_Social_Sector_and_Motor_Third_Party_Obligations)_Regulations,_2024_.pdf