INSURANCE SECTOR IN THE RURAL INDIA – STATUS CHALLENGES AND OPPORTUNITIES

<p style="text-align: left;">The Indian law states that insurance companies should be accommodative of persons in the rural sector or social sector, persons in the economically vulnerable or backward classes of the society, workers in the unorganised or informal sector. In the Insurance Act, 1938, sections 32(B) and 32(C) are where this particular law can be found. It defines the percentage of business that insurance companies are expected to put aside for the persons in the categories mentioned above. Further, the Insurance Regulatory and Development Authority has tried to accommodate the two sections of the Insurance Act by making it compulsory for insurers who offer general insurance to support business in the rural sector as well. The Insurance Regulatory and Development Authority has specified a minimum of 2% of total gross premium during the first financial year, a minimum of 3% of gross premium in the second financial year and a minimum of 5% of the gross premium in the third and additional financial years. The plan must include insurance for crops. Various programmes have been launched by the Government of India for the benefit of marginal farmers, small farmers, agricultural labourers, etc. Integrated Rural Development Programme (IRDP) have integrated these programmes since 1980 with the help of funding from the Central and State governments. The main objective of the programme is to make sure that the rural families involved are provided with working capital and assistance in the form of income generating assets, etc. Institutional credit, subsidy etc. will be offered for the same purpose. With this backdrop the present paper has made an attempt to explain the status, challenges and opportunities of the insurance sector in the rural areas.</p>