New Delhi, March 15: Most private insurers who are on the verge of completing their second year of commercial operations are confident of meeting the rural targets set up by the Insurance Regulatory Development Authority (IRDA) for fiscal 2002-03.
Speaking to The Telegraph, Saugata Gupta, chief (marketing) of ICICI Prudential Life Insurance, said: “For the period between April 2002 and January 2003, ICICI Prudential had issued over 1,50,000 policies and collected a premium of Rs 24.18 crore. We are well on track to meet our rural obligations for our second year of operations.”
Gupta added: “Rural India holds immense potential for growth in this sector, particularly in the face of greater consumer awareness and increasing farm incomes. We will be expanding into that sector once we are confident of being able to not only sell policies, but also service them on all parameters.”
Under the revised IRDA Regulation 2002, the definition of a rural sector has been changed marginally. A rural sector is one with a “population of less than 5,000 people, density of population not to exceed 400 persons per square kilometre and more than 25 per cent of the adult male population to be engaged in agriculture”.
The regulator changed the definition after relenting to pressure mounted by the insurers. Earlier, the rural sector was defined as one where at least 75 per cent of adult male population is engaged in agriculture.
Manoj Jain, branch head of HDFC Standard Life Insurance, said: “We definitely won’t have any deficit in meeting our rural targets. We have already sold 15,000 policies in rural India, thereby covering more than the stipulated amount. We expect to sell more than one lakh policies for fiscal 2002-03.”
Stuart Purdy, CEO of Aviva Life Insurance, said: “We expect to garner a premium of approximately Rs 27 crore by selling nearly 17,000 policies. There should be no problems in meeting our first year rural target.”
According to the new definition, the insurers have to sell 7 per cent of their policies in the rural areas in the first year of operations. The bar goes up every year after that to 9 per cent in the second year, 12 per cent in the third year, 14 per cent in the fourth year and 16 per cent in the fifth year.
A senior official from ING Vysya Life Insurance, which completes its second year of operations this March, said: “The company has over 25,000 customers at the end of 2002 and has achieved a first premium income of Rs 17 crore in 2002. We are very positive about meeting the rural target of 9 per cent as instructed by the regulator.”
However, IRDA has slapped notices on five life and two non-life insurers belonging to both public and private sectors, who failed to meet the stipulated levels of obligations in rural and social sectors. The failure was more in meeting the social sector obligations.
While the performance of five out of 11 life insurers was not satisfactory, IRDA officials said two of the six non-life players had not attended to the social segment. “Notices have been issued to them seeking explanations for non-performance,” the officials said. They, however, declined to name the errant insurers.
An IRDA source said: “The insurers who have been warned are making sincere efforts to meet the targets. If they still fail, they might face penalty. But as of now, we are not considering the option of cancelling their license, it is only done in very severe cases.”