168126926 Rural Insurance

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1. INTRODUCTION

1.2 RURAL INSURANCE

DEFINITION :

Rural areas (also referred to as "the country," and/or "the

countryside") are settled places outside towns and cities. Such areas are

distinct from more intensively settled urban and suburban areas; Inhabitants

live in villages, hamlets, on farms and in other isolated houses.

In modern usage, rural areas can have an agricultural character, though

many rural areas are characteried by an economy based on logging, mining,

petroleum and natural gas e!ploration, wind or solar power or tourism.

he reportRural Texas in Transitionstates that factors used to determine the

"rural" or "urban" status of an area include population, population density,

"occupational opportunities," "relative presence of agriculture," sies of

nearby cities and towns, and "#uality of life."

he I$%& guidelines define a $ural sector as a place which as per the latest

census has:

he total population of not more than '.

he density of population of not more than /s#.*m. and at least +'

of the male population is dependant on agriculture as source of livelihood.

& change in the definition of what constitutes -rural has given some leeway

for insurance companies to get in the mandatory percentage. In &ugust +,

Insurance $egulatory and %evelopment &uthority altered the definition,

aligning it with the census definition of -rural.

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he census does not define rural area. It defines only an urban area. &nd by

inference, what is not urban is a rural area.

he erstwhile I$%& definition of rural areas included all areas with a

population of less than ',, with a density of population less than s#

*m and where at least ' per cent of the male wor*ing population was

engaged in agricultural pursuits. he I$%& had amended the definitions

earlier in ++ to bring down the re#uirement stipulating that at least +' per

cent of the population had to be engaged in agricultural pursuits.The revised

definitin has !idened the "ar#et.0r. 1ive* 2hanna, %irector, 0ar*eting,

&viva 3ife Insurance 4ompany, said, "& couple of thousand villages would

now be brought under the fold. he earlier definition meant that only some

remote villages could be tapped. &nd there is no ambiguity now."

RURAL SECTOR.

India lives in villages. here are more than ' la*h villages, with population of

' or less, with a total population of nearly ' crores. 5ut nearly +' of

the rural population is below the poverty line. he people in these areas are

scattered far and wide. 6ence, to contact these people, one has to travel long

distances along roads that are very well constructed. here may not be any

convenient places for visitors to stay or to eat food in these areas. It would,

therefore, probably be more profitable for insurance companies to

concentrate their efforts on the urban areas.

o combat this tendency, the Insurance $egulatory and %evelopment

&uthority has made it mandatory for every insurance company in India to

underta*e a specific percentage of life insurance business and general

insurance business in rural and social sector, as specified in the official

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gaette by the &uthority.

7roviding insurance to the ma8ority of the Indian population, which

lies in the rural areas, scattered over a wide geographical, socio9cultural and

linguistic landscape, is a ma8or challenge for both the public and the private

insurers.

here is a great difference in the rural and urban people:s mindset,

their level of education, professions and incomes. $ural people may prefer

low premium and ma!imum ris* coverage and may prefer compensation upto

the actual amount of loss. In urban areas people may demand ma!imum

compensation and for that they might be willing to pay high premium.

here lies a great potential in the rural insurance mar*et where the

penetration of the insurance players has been low. In rural areas insurance is

often perceived as an additional burden rather than a means to combat ris*.

here is great potential for e!panding business in rural areas as most of the

Indian population lives in rural areas. hile most of the insurers may find it

unattractive to tap the rural business, it should be understood that relatively

smaller amount of policies will be compensated by a larger number of

policies. $ural insurance business should be loo*ed upon as an opportunity

and not an obligation.


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for real assets, superstitions, low earnings and credibility can really be the

threats to the insurers trying to capture rural business. 6ence some special

products need to be designed for them.

4ompared to the organied sector, the unorganied sector constitutes

ma8or section in the Indian population, which includes cultivators,

agricultural laborers and wor*ers who wor* in the unorganied

manufacturing and service industries and also includes self9employed.

&round = percent of the Indian population still lives below the poverty line

and cannot afford even their basic necessities. he >overnment of India and

the 3I4 have launched group insurance schemes for these downtrodden

sections of society such as landless agricultural laborers, beneficiaries of the

I$%7 program, etc. roup Insurance Scheme

?@@'.

here are some other schemes introduced by the government in association

with 3I4 of India such as Aanashree 5ima Bo8ana, 2rishi Shrami* Sama8i*

Sura*sha Bo8ana +?, Shi*sha Sahayog Bo8ana. Cnder these schemes the

sum covered was very low and the claim amount was very meager.

Involvement of middlemen, bureaucracy and red9tapism were the ma8or

negative factors in this regard.

Indian agriculture is highly dependent on monsoon, and crops are

e!posed to several ris*s. In this direction the D&IS E Dational &gricultural

Insurance Scheme was introduced in year + which replaced the e!isting

comprehensive 4rop Insurance Scheme (operating since ?@F'). D&IS was

primarily aimed at covering all food crops, oilseeds and annual

commercial /horticultural crops. ?? crops are covered under D&IS. Gor Small

and 0arginal Garmers, ' subsidy was given (which was e#ually shared by

the 4enter and respective State governments).


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4rop Insurance Scheme was introduced in the same year to protect the seed

breeders. &ll public sector general insurance companies also provided

livestoc* insurance. D&5&$% and the public sector general insurance

companies have set up the &gricultural Insurance 4orporation of India 3td.,

which will ta*e care of insuring farms, agricultural properties, cattle, poultry,

etc. he estimated sie of the agricultural insurance business is around

$s.? crores and it is e!pected to grow ? times in the years to come. In

order to avoid possible negligence by the insurers towards rural mar*ets (the

new players in particular), I$%& formulated the H


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= o analye the problems and challenges faced by the insurance

companies in providing the rural insurance to the rural population.

&. NEED FOR RURAL INSURANCE.

here is a great need of rural insurance in a country li*e India. his need

arises because many villagers are unaware about insurance. 0any villagers simply

blame it on their destiny when they are faced with sudden, une!pected losses.

Insurance is not a priority re#uirement for them, today. 0any others who have

ac#uired assets through ban* loans are not aware that assets have been insured. he

very few who may have some *nowledge about insurance may *now something

about life insurance. 1illagers who may *now something about general insurance

may be 8ust about a handful. han*fully this situation, of late, has slowly been

changing for the better. han*s to the 0GIs, D>s. 5ut the fact still

remains that it would be a long time before the situation changes to appreciable

levels and much remains to be done.

here is an emerging sensitivity to the need to offer insurance services

to $ural and socially marginalied populations in addition to the services of

credit and savings for their socio9economic emancipation. he vulnerability

of poor due to low and irregular incomes is e!acerbated by une!pected crises

such as illness, disability, death, or physical catastrophes such as flood, fire

etc. leading to loss of assets and livelihood. hese une!pected events can

wipe out their savings or lead them into greater indebtedness, thus worsening

their already wea* position.

IDSC$&D4J has thus far been mostly city9oriented. 5ut things are

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happening in the rural areas where human life and income9generating rural

assets need protection, and there is tremendous scope for developing

insurance business. his shows up the gross neglect of the rural areas vis9a9

vis insurance cover, though since the late9?@Ks, a silent economic revolution

has been on in the villages.

Dow that the insurance sector is open to the private sector and foreign

companies, the >overnment should pay serious attention to covering the rural

areas.hile it is true that access to insurance cover depends on the

literacy/awareness levels and assured income, well9planned and organised

efforts by committed private sector companies can yield rich dividends from

the rural areas. his is becauseL

(?) & large number of rural districts have witnessed significant growth and

prosperity;

(+) &ccess to reliable and authentic data and information has improved

considerably, which can enable #uic* and correct decision9ma*ing;

(=) here are specific functionaries and agencies in the rural areas which can

help e!plore and e!ploit insurance business in the untapped rural mar*et.

3 RURAL INSURANCE PRODUCTS

hen we tal* of $ural Insurance all that comes to our mind are insurance

products relating to life, sic*ness and livestoc*. Dot many are aware that

apart from these, there is an array of e!cellent insurance products, which are

ruralEfriendly, and of much significance to our rural fol*. o mention a few,

policies specially designed for women, farmers: pac*age policies, policies to

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protect children, personal accident policies, mediclaim and hospitaliation

policies, road safety policy, student safety insurance, householders policy,

etc. Some of the rural insurance products are as follows9

'. A(RICULTURE )U*)SET INSURANCE

SUITABILITY

his policy is suitable for insuring pump sets used for agricultural purposes.

Same policy is issued to cover pumpsets used for domestic purposes.

SALIENT FEATURES

he policy covers centrifugal pump sets which are either electrical or

diesel driven and submersible pumpsets upto +' 67 capacity.

he policy covers loss or damage to the pumpsets at the premises it is

installed caused byL

?. Gire M or lightening

+. heft / 5urglary (when the pumpset is in loc*ed enclosure)

=. 0echanical brea*down and or electrical brea*down.

. $iot, stri*e, 0alicious and terrorism damage

Additinal +vers: Glood ris* can be covered at additional premium

provided the pumpset is installed in enclosure in flood prone areas.

6owever, losses due to normal wear M tear willful or gross negligence, pre

e!isting faults, manufacturing defects covered by guarantee, transportation

and re9erection charges are not covered.

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BENEFITSL 3osses are paid on receipt of repairer:s bill. he ma!imum

amount payable for rewinding of motors is net of salvage value M e!cess and

is enclosed to the policy. &ll claims are sub8ect to a depreciation of ? per

year. 0a!imum depreciation of ' of the erected value of the pump set

shall be applied for pumpsets above F years age.

)RE*IU*

7remium is charged depending on the type of pumpset whether

centrifugal or submersible; its rated capacity (67) and the sum insured.

Sum insured shall be the new replacement value of the pumpset.

%iscounts on premium are offered if there are no claims during the

previous years and in the case of long term policy.

>roup discount is allowed if more than +' pumpsets are covered

under single policy. 7remium is loaded by ' for submersible

pumpsets over ? years old.

RE,UIRE*ENTS: 7umpset should be serviced fre#uently, chec*ed and

overhauled each year. Dotice shall be given to police in case of theft claim.

RECO**ENDATIONSL &gricultural pump sets are prone to losses due to

burn9out because of power fluctuations, theft and damage by natural

calamities. his policy is devised to cope up with the demand from the

financers and agriculturists. &s the policy is subsidised and further discountsare offered, it suits the budget of the agriculturist whose produce is dependant

on the pumpset.

A(RICULTURAL STATISTICS

It rightly points out that agricultural statistics more often mislead, rather than

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inform. here is no doubt that official published information should be

authentic and accurate. he timely collection and dissemination of correct

data on acreage, input supplies, pest attac*s, rainfall, agricultural production,

#uality of mar*ets, etc., are essential for clearing uncertainties related to

demand, supply and prices, as they affect the producers, consumers and

speculators. %ecisions on sourcing, inventory, processing and mar*eting,

cash9flow management, etc., are critically dependent on reliable information.

4otton, groundnut and sugarcane are found in 2erala, for instance, only in

certain areas of particular talu*as in a few districts.

5ut, in the estimates of the agricultural department, hundreds of tonnes of the

crops were said to be stoc*ed in certain talu*as, where no such crops actually

e!isted at all. he %epartment of &griculture and the %epartment of

Jconomics and Statistics should 8ointly ensure that the data provided to

farmers is accurate and dependable.he #uality of data collection,

compilation and dissemination should not be sacrificed to save on costs of

management, men and material.

? $ural sector offers a huge business opportunity for insurance

companies

+ Savings ratio is a healthy = of income across all socio economic

segments

= &wareness about 3ife Insurance is near universal

+ of 4ows already have a life policy

' '? of all respondents have e!pressed intention to purchase a life

policy

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&. CATTLE INSURANCE

4attle Insurance was governed under 0ar*et &greement as devised by

>I4 and the rates, terms, conditions etc. all were applicable to all the four

Insurance 4ompanies. 6owever, w.e.f 0ay +=, it is no longer under

0ar*et &greement.

his policy covers indigenous cross bred and e!otic cattle owned by

private owners, various financial institutions, dairy farms, cooperatives,

corporate dairies etc. he word cattle include 0ilch, 4ows and 5uffaloes

calves and heifers, stud bulls, bulloc*s and he9buffaloes and mithuns. &ge

group is specified for all the animals. he evaluation of the animal is done by

a veterinary surgeon.

SCO)E OF CO%ER-INSURANCE CO%ERA(E

he policy shall give indemnity only for death of cattle due toL

i. &ccident (Inclusive of flood, cyclone, famine) or any other fortuitous

circumstances (fortuitous means accidental in origin)

ii. %iseases (Inclusive of $inder9pest, 5loc* Ouarter, 6emorrhagic

Septicemia, Goot and 0outh disease sub8ect to vaccination against this

disease).

iii. Surgical operations

iv. Stri*e riot and civil commotion and terrorism.

v. Jarth#ua*e.

7olicy is sub8ect to certain standard and general e!clusions. &nimals

are identified by way of ear tagging. he policy covers both scheme and non9

scheme animals. Scheme animals are those animals, which are sponsored by

the >overnment agencies and are financed by some financial institutions,

which may or may not involve any subsidy. 0aster 7olicy arrangements are

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usually done with %$%&, 5an*, 4o9operative Societies etc. here is a

provision of 3ong erm 7olicies also.

.FOETUS/UNBORN CALF0 INSURANCE SC1E*E

his scheme covers the ris* of death of embryo/ foetus due toL

a. &ccident (Inclusive of flood, cyclone, and famine) or any other fortuitous

circumstances (fortuitous means accidental in origin)

b. %iseases (Inclusive of $inger 7est, 5loc* Ouarter, 6emorrhagic

Septicemia, Goot and 0outh disease sub8ect to vaccination against this

disease).

c. Surgical operations

d. Stri*e riot and civil commotion and terrorism.

e. Jarth#ua*e.

he scheme is applicable to both the embryo transferred from a selected

donor to the synchronied recipient or froen embryo transferred to the

recipient and also the embryo/fetus developed by artificial insemination

techni#ue.

his can be covered as a separate policy in addition to 4attle Insurance

7olicy covering the recipient mother cow/buffalo.

he cover operates from the Kth day of the transfer of live #uality

embryo/successful insemination and terminates from ++ N/9 ' days for cow

from the date of confirmation of pregnancy or from the date of calving

whichever is earlier. It is not an annual policy. he perils covered are still

birth, abortion of all *inds e!cept malafied or induced once. &ccidental ris*,

include abortion under veterinary advice to save the mother in conditions li*e

downer cow syndrome, prolapse of uterus, portion of uterus, fracture of limb

etc. he sum insured is fi!ed and depends on the age of the embryo.

2. )OULTRY INSURANCE

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SUITABILITY:

his policy is suitable for the poultry farmers, the beneficiaries of schemes

sponsored by %$%&, %7&7, I$%7 and financial institutions providing

assistance to poultry units.

SALIENT FEATURES:

his comprehensive policy is issued to cover poultry consisting of 5roiler

chic* / 3ayer chic*ens /4oc*s and hens in the poultry farms. & minimum

number of ? broilers / ' layers or + birds per batch in the hatchery can

be covered under this policy.he policy provides compensation for loss to

birds dead due to accident (including fire, lightning, flood, cyclone,

earth#ua*e, riot, stri*e, terrorist act); diseases contacted or occurring during

the period of insurance.

BENEFITS:

7olicy provides compensation when the mortality rate of the birds e!ceeds

the following limits.

5irds &ge 0ortality $ate

5roilers ? day to K wee*s 0ore than ' of the batch sie.

3ayers ? day to F wee*s

@th wee* to +th

wee*

+?st wee* to

+nd wee*

0ore than ' of the batch sie.

0ore than = of numbers at

beginning of @th wee*.

0ore than ? of numbers at the

beginning of +?st wee*

In the event of death of birds F of the bird value or as decided by the

veterinary surgeon whichever is less is paid. here is an additional deductible

of + in case of >umbore disease.

)RE*IU*:

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7remium rates depend on the age of the bird; whether or not they are

financed under I$%7 scheme as followsL

5irds &ge 7remium $ate

Gor I$%7scheme

Don I$%7scheme

5roilers ? day to F wee*s

? day to K wee*s

.+' per

bird/batch

? per bird p.a.

?.' (K p.a.)

?.+ (.F p.a.)

3ayers ? day to + wee*s

+? wee*s to + wee*s? day to + wee*s

7arent stoc*(hatchery)

9 9

.F per bird9

=.+

=.' '.'

'.

RE,UIRE*ENTS:

& 4ertificate from a #ualified veterinarian is re#uired. In case of layer farms

having more than ' birds, insurance company:s veterinary officer or panel

doctor shall carry out inspection. &ll the birds in the farm should be insured.

Standard practices of poultry rearing, record *eeping shall have to be

practiced.

RECO**ENDATIONS:


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birds, which are e!otic and cross9bred. Indigenous and non9descript birds will

not be insured. &ll birds in a farm should be covered. he scheme is

applicable to poultry farms consisting of minimum ? birds under scheme

category and ' birds under non9scheme category. In general, it is ?

broilers per batch, ' layers per batch and + hatchery birds per batch.

Gor layers, the cover is provided from ? day to + wee*s, +? wee*s to +

wee*s or ? day to + wee*s. 5roilers are covered from ? day to K wee*s or F

wee*s. 6atchery birds are covered from ? day to + wee*s. he value of the

bird is fi!ed according to the age. he cover is provided against death of the

birds due to accident or disease. &ll applicable cases, vaccination are a must.

he valuation of the birds is arrived by a multiplying factor with the age in

wee*s. he multiplier is applied to the prevailing feed cost and the day old

chic* cost is added to arrive at wee* wise valuation. 4ertain common and

standard e!clusions applied. Since all the birds are covered, there is no need

for identification. he poultry farmer is e!pected to maintain all the relevant

records li*e feed register, floc* record on day to day basis, daily stoc*

register, mortality, culling, vaccination, feed consumption, production, de9

brea*ing, and incidents of diseases, sales and purchase.

3. A,UA CULTURE INSURANCE:

SUITABILITY:

his policy is suitable for licensed farms or farms provided in accordance

with the >overnment Dotification for growing brac*ish water shrimp / Gresh

water prawns by adopting e!tensive / modified e!tensive / semi intensive

systems.

SALIENT FEATURES:

? he policy grants cover two sections.

Se+tin I: 5asic cover which covers only losses due to natural

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calamities

Se+tin II: 4omprehensive cover granting 4over for disease also. 7olicy is

usually given for a period of P months.

+ he basic cover provides compensation for total loss of shrimp /

7rawns due to L

= Summer *ill, 7ollution from e!ternal source, poisoning, riot, stri*e and

malicious acts of third parties, errorism, J!plosion / Implosion, &ir

craft M aerial devices or articles dropped there from, impact damage,

earth#ua*e, storm, tempest, cyclone, flood and inundation, volcanic

eruption and other convulsions of nature. 4omprehensive cover in

addition to basic cover encompasses death due to diseases e!cept those

caused by bad management and nutritional deficiencies.

BENEFITS:

? In the event of a fortuitous event resulting in a loss, the basis of loss

settlement will be the sum insured fi!ed as followsL9

Sum insured Q Dumber of seeds released R e!pected survival rate ()

R e!pected average body weight in grams R input cost per 2g.

+ Gor losses upto thfortnight stage, ma!imum liability shall be restricted

to F of the input cost only. Grom 'thfortnight onwards claims are

admitted as a percentage of biomass.

= %eductions towards salvage are made.

hen the percentage of loss at any stage e#uals or e!ceeds F of the

total shrimps / 7rawns insured, it will be treated as total loss.

)RE*IU*:

7remium rates have been fi!ed as followsL9

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Section E I (5asic) Section E II

(4omprehensive)

a) Gor highly cyclone prone

ones

= P

b)


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his new scheme is being introduced to scheme covers all cross9

sections of women in the age group of '7 t 83 9ears irrespective of their

income, occupation or vocation. he scheme would benefit housewives,

students, domestic labor, s*illed or uns*illed labor and other women engaged

themselves in similar or other types of activities in rural, semi9urban areas.

Since this is a low cost insurance cover, it is hoped that the 4entral

>overnments would come forward and e!tend all support for the

implementation of the scheme.

he scheme would cover death and/or disablement to women arising

out of accidents all types of accidents as defined further.

a. 7ermanent otal %isablement $s.+', /9

b. 3oss of one limb and one eye or loss of both eyes and/or loss of both limbs

$s.+', /9

c. 3oss of one limb/sight in one eye $s.?+, '/9

It is further understood and agreed as underL

i. In case of un"arried women, the policy will be e!tended to cover death

due to accident as defined in the policy in which even the compensation will

be payable to the nominee or legal heir. he compensation shall be $s.+',

/9.

ii. In case of "arried women, the policy is e!tended to cover the death of the

insured:s husband arising out of accidental death caused by e!ternal violent

and visible means and the compensation is payable to wife only.

he compensation shall be $s.+', /9. It is clarified for avoidance of doubt

that in the event of wife predeceasing the husband or in the event of

simultaneous death of husband and insured wife no compensation shall arise

under this e!tension.

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8. B1A(YAS1REE C1ILD 5ELFARE )OLICY

his scheme is a novel scheme for girls and provides insurance cover to one

orphaned girl child in a family who loses either the father or the mother only

due to accident.

he scheme provides that such an orphaned girl child below the age of

K a fi!ed amount will be given for loo*ing after the needs of child to the alive

parent/guardian till the child attains the complete age of K. hereafter, from

the age of K to ?+ years the girl will get a fi!ed amount as scholarship

provided that she is admitted in a school and e!penditure is incurred on her

education. Grom ?+ to ?F years the girl child gets double the scholarshipamount and after attaining the age of ?' she will get a fi!ed lumpsum amount

either to pursue her own chosen profession or carrying on her higher

education or to settle down if she gets married. he stipend payable till K

years is $s.?+/9 per annum to meet the re#uirements of the child. Grom K

years to ?+ years a stipend of ?+/9 is paid as scholarship and from ?+ years

to ?F years the stipend is doubled to $s.+/9. he sum insured of $s.+',

/9 which accrues to the child on accidental death of one or both the

parents is credited into a special fund called orphans girl child fund, which

was managed and multiplied by >I4 &SSJ 0&D&>J0JD 4


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Se+tin &E his section provides indemnity against death or permanent total

disablement of the animal used for pulling or driving the carriage due to

accident caused whilst attached to the cart/tonga/coach.

Se+tin E hird party liability caused by cart/tonga/coach insured including

passengers liability upto $s.'/9 per accident and $s.?, /9 for all

accidents in a year with certain standard e!clusions.

Se+tin 2E his section indemnifies the driver against death or loss of sight

of two eyes or loss of use of two hands or loss of use of two feet or loss of

sight of one eye and loss of use of one hand/foot or permanent total

disablement E $s.?, /9 and loss of use of one hand/foot or loss of sight of

one eye E $s.', /9 Sum insured depends on the mar*et value of

cart/tonga/animal and animals to be used for driving are 0ale buffalo,

bulloc*, castrated bulloc*, horse, mule don*ey, camel, and ya*.

;. )LANTATION-1ORTICULTURE INSURANCE

SUITABILITY:

his policy is suitable for individual farmer E owner or tenant engaged in

cultivation of horticultural trees or plantations or an association / organied

and registered body of farmers engaged in cultivation of specified crops. &lso

bodies procuring inputs, processing / mar*eting of the produce can ta*e this

policy.

SAILENT FEATURES:

' his policy can be issued to cover 1rti+ultural trees-Or+hards su+h

as +itrus fruits (ranChi+#,

& )"e *an


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2 Sub8ect matter of coverage is fruits in respect of crops listed in

horticulturalcrops and trees in respect of plantation crops and shoot in

case of sugar cane.

3 he indemnities are provided only on input cost basis. he period of

insurance is crop duration or ?+ months whichever is shorter however

period of insurance in respect of sugar cane is e!tendable by such

period beyond ?+ months upto a ma!imum of ?F months as may be

necessitated by the varieties.

4 In respect of rubber,eucalyptus, poplar and tea* wood where plants are

first re#uired to be raised in nurseries and then fields the period of

insurance shall commence after e!piry of ?+ months from

transplanting (nurseries are not covered).

? he perils covered are Gire and allied perils including 3ighting, Storm,

6ail storm, 4yclone, riot stri*e and terrorism. his is standard cover.

ADDITIONAL CO%ER:

+ Cnseasonable rains and frost in case of >rape vinesM tea, loss or

damage by wild animals in case of Sugarcane, banana; drought M

disease in case of 5anana, flood M inundation in case of tea

plantations; disease Mpests in case of tea plantations and betel vine are

the additional covers available.

BENEFITS:

4laims are paid to the e!tent of F of the assessed loss sub8ect to the over

all limit of the sum insured. Sum insured shall be based on the cost of

cultivation i.e. input cost or cost of rising / development of trees.


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)RE*IU*:7remium shall be covered for different crops as followsL

TY)E OF CRO) RATE

?. 6orticultural 4rops94itrus fruits, 4hi*oo, 7omegranate,

5anana, >rapes

'.

+. 7lantations9$ubber, Jucalyptus, 7oplar, ea* ood, ea,

0ango

?.+'

=. Sugarcane ?.+'

. 5etel vine K.

'. Sweet 4hili (4apsicum) .

K. 4oconut = months to = years

years to years

F years and upto ' years

.K

.'

?.'

RE,UIRE*ENTS:

Inter cropping may be done only if it does not interfere with normalgrowth and health of the trees.

Do smo*ing or coo*ing shall be allowed in the open fields and within

=m of the property insured. %ry vegetation M leaves should be removed

periodically.

RECO**ENDATIONS:

7lantations are e!posed to a variety of perils ranging from pests to forest

fires. It becomes very difficult for the farmer to come out of loss in the

absence of comprehensive insurance cover. It is for this reason, this

insurance policy is devised which is very popular and hence

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recommended.

'7. FLORICULTURE INSURANCE:

SUITABILITY:

>rowers of commercial flowering plants such as rose, chrysanthemum and

8asmine having ade#uate agricultural e!pertise in the sub8ect may ta*e out

his policy.

SALIENT FEATURES:

his policy covers only plants whilst growing in the farm / green house / 7olyhouse against total loss or damage due to

?. Gire including forest fire and bush fire.

+. 3ightning.

=. &cts of terrorism, $iot M stri*e.

. Strom, hailstorm, cyclone, flood M inundation.

'. Jarth#ua*e.

K. Impact damage by rail / road / air vehicle M animals

ADDITIONAL CO%ERS: 7olicy may be e!tended to cover ris*s of loss

due to drought, 7ests, M diseases specific to flowering plants.

BENEFITS: he 7olicy covers the input costs incurred till the time of loss.

hese are the recurring e!penses incurred to raise / maintain the plants

such as soil preparation, fertilier, manure, cost of plants / seeds/

saplings/ cost of planting /sowing M 7runing, pesticides, insecticides,

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irrigation, 3abour charges and other costs specifically covered. 4laims

e!ceeding ' of the total sum insured per hectare or $s.?/9 which

ever is less only shall be admitted. Jach and every claim is sub8ect to an

e!cess of + .

)RE*IU*:

7remium is charged on the sum insured opted as follows.

$IS2 4reen 6ouse ?.+'

In open field

+.' &dditional 4over (7ests / diseases M drought)

Cnder glass house />reen house .'

In open field

?.'

RE,UIRE*ENTS:

&t the time of ta*ing out insurance, the 7lants should be at least one month

old after plantation / transportation i.e.; the plants should be well

established in the soil.

Insurance cover will be granted sub8ect to pre9acceptance inspection by

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insurers and feasibility report from state &gricultural directorate /

J!pert:s opinion being received.

RECO**ENDATIONS:

Gloriculture re#uires constant supervision and maintenance. %espite all the

preparations, the plants are e!posed to ris*s from pests M un*nown

diseases or action of natural calamities. It is for this reason, coverage of

the plantation under this policy is strongly recommended.

''. LIFT IRRI(ATION - S)RIN6LER INSURANCE

SUITABILITY: his policy is suitable for the agriculturist using the lift

irrigation or sprin*ler installation for cultivation.

SALIENT FEATURES: his policy covers loss or damage to inta*e wells,

delivery chambers, 8ac* well, pump9house, water storage tan*, pipe lines,

cables, starters and motors of the lift irrigation system or sprin*ler

installation arising out of

?. Gire and allied perils

+. Glood, earth#ua*e and land slide

=. &ccidental damage to machinery M pipe line.

. 5ursting of pipe lines.

'. heft.

BENEFITS:


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claim is applicable. heft claims are paid on receipt of non E traceable

certificate from the police.

)RE*IU*: & rate of ? on the cost of the entire system is applicable for

insurance under this policy. he sum insured shall be the new

replacement cost including freight, customs duty M erection costs.

errorist ris* can be included in the cover at a premium.

RE,UIRE*ENTS: %uly filled in proposal giving the details of the

machinery M their individual replacement cost should be submitted.

RECO**ENDATIONS: 3oss due to brea*down, theft or accidental

reasons to the machinery not only is a loss in itself, but also has

conse#uent effect that the crop is affected. It is necessary that the system

is repaired / reinstated to mitigate the losses. his policy comes to aid in

such situations and is therefore recommended.

'&. CALF 1EIFER REARIN( INSURANCE SC1E*E

he coverage under this policy is meant for calves/heifers from one day to =+months. he valuation depends upon the age of the cow and is fi!ed

according the age of the calf.&ll terms and conditions applicable to cattle are

applicable here also. 0inimum coverage is ta*en from ?+ months however

this is not an annual policy.

'. S1EE) AND (OAT INSURANCE

his scheme is also governed under 0ar*et &greement. 7olicy provides

indemnity to indigenous cross9bred and e!otic sheep and goat against death

due to accident (including fire, lightening, flood, cyclone, famine, stri*e, riot

and civil commotion) and disease. Jarth#ua*e and landslide covers are also

provided. Standard and common e!clusions apply as per 4attle 7olicy.

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&nimals are identified by means of small brass buttons ear tags. &nimals

under scheme category en8oy certain benefits in premium rate and claim

procedure.

'2. CA*EL INSURANCE

he camels are covered against death due to accident or disease as per

Standard 4attle Insurance 7olicy. he ma!. S.I. is restricted to $s.=/9.

'3. )I( INSURANCE

&ll indigenous, cross9bred and e!otic pigs are covered however under

scheme category e!otic animals are not covered. he age group is from

months to = years. he coverage is against death due to accident or disease.

J!clusions as per 4attle 7olicy apply here also. 7ermanent total disablement,

breeding and furrowing ris*s are not covered. 1accination in applicable

diseases is compulsory.

Jvaluation depends upon the age of the animal. &nimals are identified by

means of small brass buttons ear tags.

'4. 1ORSE> *ULE> DON6EY> )ONY> YA6 INSURANCE

he 4overage is as per Standard 4attle 7olicy. 6owever the age group

is restricted to + yrs to F yrs.

'8. *ICRO INSURANCE

0icro insurance is one of the biggest and advance innovations in the

insurance sector of India. &s the ma8ority of the population living in the

rural areas and the ma8ority of the population below poverty lines. he

insurance company with a view to target this section of the society, has

designed the product which the poor people will be capable to purchase.

In micro insurance the face value of the policy will be very low i.e. is

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$s+' and the premium will be payable on wee*ly basis instead of

monthly, #uaterly,or yearly basis .the premium of the +', on wee*ly

will be $s?' only which the poor people can afford. In this way the

insurance will be able to cover this section of the section which consists of

the biggest part of the mar*et. he 3I4 has already introduce micro

insurance in the mar*et before + months

4 GROWTH OF RURAL INSURANCE BUSINESS IN

INDIA

here has been a tremendous growth of rural insurance business. hese are

the outcomes of the efforts ta*en by the insurance companies and obviously

by I$%&. here are certain norms prepared by the I$%& as per their census

population. hese norms include certain number of policies which an

insurance company has to meet in a year.

he best e!ample of growth of rural business can be seen from the below

statistical data showing 3I4:s growth performance.

LIC?S RURAL BUSINESS

/INDI%IDUAL ASSURANCE FOR &777@&77'0

he above table clearly reflects 3I4:s efforts in spreading rural insurance

business in villages across the country. 3I4 had not only covered the number

of policies as per I$%& definition but also sold more policies doing a surplus

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RURAL INSURANCE

business of around =F. %ue to this increase there has been a rapid growth in

number of policies ta*en by rural customers thereby increasing the business.

his can be shown with the help of the chart given below.

(RO5T1 OF RURAL BUSINESS

/NO. OF )OLICIES0 CENSUS DEFINITION

Subse#uently 3I4 e!perienced a rise in the sum assured i.e claim settlement.

his can be shown with the help of the diagram.

he sum assured (number of policies) are in lacs.

hus by the above graphs it is evident that rural insurance has wide scope of

growth and development.

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IS INDIAN A(RICULTURE UN)RODUCTI%E

7oor returns on rich harvest.

If agriculture is not productive enough, should farmers be given subsidies or

use the money to import grains?&gain, the problem is not coming up with

the correct answer but as*ing the right #uestion. hat does one mean by

productive, for instanceT

If it means that farmers here are unable to *eep their prices as low as huge

multinational agricultural conglomerates do, there are reasons for that that

has nothing to do with farmers not being productiveL one is, the

conglomerates usually end up e!erting a #uasi9monopolistic hold on the

mar*et; another is, foreign agriculture is heavily subsidised. hen there:s the

semantic #uestion. hat does productive meanT 7roductive for whomT 5y

what standardT If we are a capital9poor, labor9rich country, using more

people in agriculture is not unproductive; it:s the best use of your resources.

Csing high9tech e#uipment which does away with people is, in those terms,

a highly unproductive use of your resources.

Far" issues

hough less than +' per cent of >%7 is contributed by the farm sector, it

employs more than per cent of the wor*force.

India is in a parado!ical situation where it is reaping the benefits of being

the largest producer of several commodities while, at the same time, not

e!periencing any material enhancement. he country re#uires customied

solutions for its problems.

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6 PRIVATE COPANIES IN THE RACE

A) )LANS CRO) INSURANCE IN ALL DISTRICTS

he &ndhra 7radesh >overnment will e!tend crop insurance scheme to all

districts in the State, besides ensuring the availability of $s +K, crore as

loans to the farmers in the ne!t financial year.Instead of ta*ing mandal as a

unit for crop insurance, a village would now be ta*en as a unit to ensure

proper implementation. he scheme, which is being implemented in ?

districts currently, will be e!tended to all districts in the State. Cnder the

crop insurance programme, over $s =K crore has been paid to the farmers

in &nantapuram district alone.

$eferring to the agricultural productivity in the State, %r $eddy said there

has been on a steady rise. 6igh yields have been reported from &dilabad,

2arimnagar, 2urnool, &nantapur, 2rishna, >untur and est >odavari

districts.

H4ompared to last year, the average rice production per hectare has gone up

to =, *ilos from +,K=? *ilos, while maie has improved to ,+ *ilos

from +,=@F *ilos, he said.

LI%ESTOC6 INSURANCE *A6ES FAR*ERS TO (O IN FOR

CROSS@BREEDIN(

3ivestoc* insurance, particularly cattle, is catching up in rural India. &

general insurance firm such as I4I4I 3ombard sees this to be as big as the

health insurance portfolio.

5ut more than that, it is encouraging cross9breeding of cattle, says 0r.

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7ranav 7rasad, 6ead $ural and &griculture 5usiness >roup, I4I4I

3ombard. H4attle farmers are bringing good breeds from other regions to

their places and are also cross breeding, now that they are aware of livestoc*

insurance, he says.

%airies and cooperatives are seeing livestoc* insurance as one way of

protecting their bottom lines. H%airy farmers are realiing that cattle is

insurable and financially includable, this has brought about an awareness of

prevention of health problems in cattle.

I4I4I 3ombard, which has insured nearly one la*h cattle in the three years

since it began this venture, sees its livestoc* business e!panding, including

e!tending group insurance for cattle.4urrently, the firm e!tends livestoc*

insurance to &ndhra 7radesh, 4hhattisgarh,


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interest. Grom a meager enrolment of a little over + farmers in +, I4I4I

3ombard now has enlisted +.' la*h farmers for this policy. &bout three la*h

hectares have been covered by this, 0r. 7rasad says.

he weather insurance ensures that farmers are compensated through the

policy in case weather plays truant with the crop or its output. %ifferent

parameters have been set up and the weather inde! is drawn up district9wise

through a tie9up with Dational 4ollateral 0anagement Services, an arm of

D4%JR. he inde! monitors rainfall during sowing and temperature during

harvest.

A%I%A LIFE INTRODUCES RURAL *ICRO INSURANCE

&viva 3ife Insurance, the L+K 8oint venture between between %abur and

C2s largest insurance group, &viva 7lc, today introduced >rameen

Sura*sha, a micro9insurance rural term insurance plan for 5&SIR customers.

his traditional term plan has been developed with the ob8ective of giving

the rural policyholder ma!imum benefits.

>rameen Sura*sha is designed such that it reduces the burden of the

policyholder to pay premium yr after yr. Instead, under this plan, the

policyholder pays premium for a period of 8ust two years and then avails the

term benefit for either ' or ? yrs.

In case the policyholder is unable to pay the +nd annual premium, the plan

will still offer a full cover for ?F months or F months from the due date ofunpaid premium for the five9year or the ?9year policy plan respectively. In

addition, ta! benefits can be availed as per Section F4 of the Income a!

&ct, ?@K?.

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5ert 7atterson, managing director, &viva 3ife Insurance, India said, "&viva

has been a serious player in the micro insurance arena. e have been

associated with 5&SIR since ++ and together we have insured lives of

many in the social sector. ith the launch of >rameen Sura*sha for 5&SIR

customers, we hope to increase our reach and provide the benefits of life

insurance to ma!imum number of people in rural and social sector. &viva

India has covered close to @, lives in the social sector in association

with 5&SIR and other micro insurance organiations."

Cnder the new plan, the premium is calculated based on the sum assured

and age (?F to ' yrs) of the policyholder. he minimum sum assured is $s

', and the ma!imum is $s ',. he policyholder also has the option

of surrendering the policy in which case the surrender value is then paid.

IN( %YSYA )LANS TIE@U)S TO TA) RURAL INSURANCE

ID> 1ysya 3ife Insurance 4ompany is eyeing collaborations to tap what

they consider a vast potential mar*et in rural India where most people

remain uncovered by insurance.

"he challenge is to reach out to nearly @ percent of the Indians who are

uncovered by any type of insurance. &s almost K percent of Indians live in

rural areas, we are loo*ing at partnering with institutions and D>


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RURAL INSURANCE

ith around +', policyholders paying an average premium of $s.@,

per year, ID> 1ysya is wor*ing out new strategies to reach its target of

having two million customers by +?, 0etelaar said.

"e are loo*ing at more ban*ing and other types of financial institutions

li*e cooperatives and well9entrenched D>


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the 3ife Insurance 4orporation (3I4) en8oyed a monopoly as the sole

provider of life insurance cover.

%ictated by the mar*et demand, ID> 1ysya has been gradually introducing

fresh features in its product pac*ages.

ith customers having a wider choice due to privatiation, the company has

been wooing the mar*et with more affordable premium options.

"e have K products, some with money bac* features. e have 8ust

introduced riders for our products giving the customer more choice in the

term offer and an add9on provision for critical illnesses," said 0etelaar.

ID> 1ysya also sees tremendous growth potential in the pension sector. It is

currently formulating pension schemes that would be launched as soon as it

gets the clearance of the insurance regulatory authority and has trained

personnel to roll out the products.

TA) &77 *ILLION RURAL YOUT1 )OTENTIAL TO *ULTI)LY

FIS> INSUR. COR). TURNO%ER: ASSOC1A*

Ginancial Institutions (GIs) and Insurance 4ompanies can rope in about &77

"illin Rural Investrs in their fold provided they design innovative

savings and loan schemes on lines of commercial ban*s and even post

offices and multiply their annual turnovers by disbursing agri, housing,

personal and education loans and easy insurance schemes at affordable rates

to potential aspirants, according to &ssociated 4hambers of 4ommerce and

Industry of India (&SS


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about + million rural youth with reasonable per capita income, investment

opportunities are virtually non9e!istent.

Hhis is because, these have no access to popular savings instruments of

various commercial ban*s, insurance companies and post offices branches

in ulteriors of countryside and are disparately loo*ing to channelise their

finances for suitable returns. & good number of rural investors are also

aspiring to become self reliant but lac* avenues for credit in areas for food

processing, better horticultural and agricultural facilities, training for s*ill

development to process their mil* etc., says the 7aper.

It recommends that in aforesaid areas, disbursement of agri loan would wor*

as a magic and insurance schemes would provide rural youth safety net to

protect their investments, suggesting that financial institutions and insurance

companies should come forward to ade#uately harness this hitherto

une!plored areas, says &SS


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become an important facet of rural India. his income mainly comes from

dairy, food processing and pac*aging, commodity trading and infrastructure

development income. he non9agriculture base of rural occupation and

income have been growing in rural >%7 figures that are estimated at '.

In view of rural investors rising income, they have now more buying

capacity than before. he GIs can lure them for renovation and

moderniation of their housing at K9 rate compared to ?9?+ rate in

urban India. $ural masses are in need large sums for the marriages in their

families and other close relations and personal loan at affordable rate will be

an ideal choice for them.

$ich farmers who have benefited from agriculture, farming, dairy processing

M other sectors are using tractors, 8eeps, tempo etc. for loading and

unloading their crops and other products to traders. hese farmers should be

targeted for &uto 3oans and the repayment of these loans should be between

K9 years with easy interest rates.

&ccording to &SS


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RURAL INSURANCE

e!tensive rural agent networ* for sale of insurance products could be

established. he agent can play a ma8or role in creating awareness,

motivating purchase and rendering insurance services

5eing an agrarian economy again there are immense opportunities for the

insurance companies to provide the liability and ris*s associated in this

sector. he 7aper found that the rural mar*ets are still virgin territories to a

great e!tent and offer e!citing opportunities for insurance companies. he

surest path to success is to 8udge and measure the re#uirements of the people

correctly and offer a scheme that they would be able to afford.

&SS


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RURAL INSURANCE

be used for better delivery and distribution of small products by ade#uate

awareness. $ural women could also be included into distribution networ*

and they would be ready to wor* in minimum monthly income of $s.?9

?+ with efficiently and sincerity. If distribution networ* can be built

around this theory then wider distribution of small savings products can be

enhanced in a low cost manner and unserved mar*ets can be addressed by

formal institutions.

RURAL BAN6IN( AS CATALYST

hile public investment in agriculture has declined to ?K.+ per cent, the

rural ban*ing system has been encouraging farm development through

provision of credit facilities for production of crops including horticulture,

plantation, forestry; purchase of farm e#uipment; livestoc* and fish farming;

irrigation facilities and installation of diesel engines, and so on.

5an* credit is also provided for establishing village/cottage industries,

stoc*ing/supplying farm inputs and cattle9feed, and business and trade

purposes. Grom ?@K@9 to ?@@@9+, up to $s =.? crore has been provided

to the farm sector.

ith enhanced incomes, and further supplemented by ban* credit, the rural

population is ac#uiring consumer durables, constructing houses, purchasing

vehicles, computers, and so on.

&ll these assets need to be protected from damage/loss, natural or manmade.

hus, the rural areas offer enormous opportunities for committed private

insurance companies in both life and non9life insurance schemes.

his will, in turn, help create more that would have direct impact on rural

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the %istrict $ural %evelopment &gency, the %istrict Industries 4entre, the

%istrict %evelopment 0anager of nationalised ban*s and 3ead %istrict

0anager of the 3ead 5an*. &ll these institutions and agencies can offer

considerable information to insurance companies.

Jducated unemployed youths of the villages can be trained and become

valuable assets for the companies. hile insurance companies are eager

to build their business in the urban areas, there is a hitherto untapped

potential for business in the rural areas which can be e!ploited.

he 4entre and the State governments must encourage private and

foreign insurance companies to enter the rural areas, and provide protection

to rural assets from damage and loss due to natural and man9made

calamities. Gor this purpose, reasonable and need9based concessions/relief:s

in ta!ations and subsidies re#uired infrastructural facilities and

administrative support must be e!tended, at least for ten years. he

government may consider appointing an J!pert 4ommittee on $ural

Insurance to wor* out the modalities for private and foreign companies

interested in entering the rural areas.

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