Online BusinessLIC, HDFC Life miss rural obligations
The state-owned insurance giant Life Insurance Corporation of India (LIC) and private sector insurer HDFC Standard Life missed out on rural sector obligations during 2008-09. While two non-life insurers, Bharti Axa General Insurance and Apollo DKV, did not meet both the rural as well as the social sector obligations during the last financial year.
- Life insurers log 53% rise in first premium income - "Knowledgeable investors do not look at profit or loss numbers" - Where do I begin? - Offers that lead to despair - Infosys BPO chief quits; to join HDFC Standard Life - HDFC Standard Life lowers capital infusion by Rs 100 crore
According to the annual report released by the Insurance Regulatory and Development Authority (Irda), “Out of the 21 life insurers in the private sector, except HDFC Standard, all have fulfiled their obligations towards the rural sector. LIC, which is non-compliant with its obligations in the rural sector during 2008-09, underwrote a lower number of policies in rural sector, than the prescribed 25 per cent for 2008-09.”
A life insurance company has to mandatorily underwrite 7 per cent of the total policies in the rural sector obligations in the first financial year up to 20 per cent in the tenth financial year.
Similarly in respect of non-life insurer, 2 per cent of the total gross premium income in the first financial year has to be rural sector, which goes up to 7 per cent from the ninth financial year onwards.
At the same time all four public sector insurers have complied with both the rural and social sector obligations for 2008-09 with 7 per cent of the quantum of insurance business. The norms prescribed all public sector insurers to write 10 per cent above the target of 2007-08 in the number of lives covered by the respective insurer in the social sector or 550,000 or whichever is higher.
LIC complied with its social sector obligations and covered a more number of lives than the prescribed 2 million as obligations for 2008- 09.
In social sector, all insurers have to underwrite five thousand lives in the first financial year to 55,000 lives in the tenth financial year under social sector obligations.