The Insurance Regulatory Development Authority of India (IRDA) has increased the specified obligations of insurance companies to the priority sector.Speaking on the sidelines of the Micro Insurance Conference organised by the Munich Re Foundation along with the IRDA, CS Rao, chairman, IRDA said: 'When the Regulations were defined, they were for the first five financial years of operations of the insurance companies (post privatisation).With most companies now having completed five years,the regulations have to be extended for the coming years.'As per the 2002 regulations, pertaining to the obligations of insurance companies for the rural and social sector, a life insurer has to do 7% of total policies written direct in that year from rural areas in the first financial year which increases to 9% in the second financial year; 12% in the third financial year; 14% in the fourth financial year and 16% in the fifth year.As per the extended norms, life insurers from 6th year to 10th year onwards, will have to underwrite 18% to 20% of the total policies they underwrite from rural areas.On the other hand, for non life insurance companies, for first five years , 2% to 5% of total gross premium underwritten should come from rural areas. From 6th to 10th year of operation, non-life insurers will have to underwrite 5% to 7% of the total gross premium.For fulfilling social obligations, life and non life companies should cover 5000 to 20,000 lives in the first five year of operations depending on the year of operation. This number will now increase from 25,000 to 55,000 lives from 6th year to 10th year of operation.'We are qualitatively defining obligations and insurance companies will have to conform to the micro insurance guidelines. That means only those products which conform to the guidelines can be sold by the insurers for meeting the social and rural obligation' added an IRDA official.
