Irda panel on rural obligations

The Insurance Regulatory Development Authority of India (Irda) has internally formed a committee to look into insurance companies' specified obligations to the priority sector.

In 2002, Irda in consultation with the Insurance Advisory Committee had chalked out regulations pertaining to the obligations of insurance companies for the rural and social sector.

However, these were defined for the first five financial years. Now that some of the companies are in the sixth year of their operations post privatisation, the regulations have to be extended for the coming years.

Says CS Rao, chairman, Irda, "The obligations towards rural/social sector were specified for five years. Now that some companies are in the sixth year of their operations, we need to specify the norms. We have formed a small group internally to study the appropriate percentages that need to be prescribed up to 10 years. These recommendations would then be submitted to the Insurance Advisory Committee."

As per the 2002 norms, a life insurer has to do seven per cent of total policies written direct in that year from rural areas in the first financial year which increases to nine per cent in the second financial year; 12 per cent in the third financial year; 14 per cent in the fourth financial year and 16 per cent in the fifth year.

TAC's role to continue

Meanwhile, the regulator has has clarified that in the tariff-free scenario too, the Tariff Advisory Committee (TAC) would be empowered to collect data from insurers and take such actions, including imposition of penalties to ensure timely and error-free submission of data.

It would be imperative for all insurers and reinsurers to provide to TAC the requisitioned data in the mode, manner and periodicity prescribed by the committee, the regulatory authority stated in a circular posted on its website on Thursday.

According to Irda, the need for data for the insurer and regulator has become more pronounced than ever in the light of the proposed detariffing of general insurance products. Authentic and error-free data has to flow consistently to a national data repository.

The varied requirements of data by the regulator, the insurers and industry, and the consumers have to emanate from this repository with due aggregations.

The confidentiality of the data has to be protected and the sensitivities associated with a competitive market are to be respected, according to Irda.