INTRODUCTION

Under the provisions of sections 32B and 32C of the

Insurance Act, 1938, insurance companies are obliged to
provide such percentages of business as may be specified by
the IRDA, for persons in the rural sector or social sector,
workers in the unorganized or informal sector, for economically
vulnerable or backward classes of the society and other categories
of persons, as may be specified by the IRDA.
The IRDA has, in pursuance of the provisions of the above two
sections of the Insurance Act, issued the (Obligations of
Insurers to Rural or Social Sectors) Regulations, 2000, which
lays down that every insurer transacting general insurance
business, shall underwrite business in the rural sector, to the
extent of at least 2% of total gross premium in the first financial
year, at least 3% of gross premium in the second financial
year and 5% of the gross premium in the third and further
financial years. The obligations include insurance for crops.
The Rural sector has been defined as any place which, as per
the last census, has a population of not more than 5000,
density of population of not more than 400 per square
kilometer, and at least 75% of the male working population
engaged in agriculture.The Government of India has launched various
programmes for the benefit of small farmers, marginal farmers, agricultural
laborers, etc. Since 1980, all these programmes have been
integrated into Integrated Rural Development Programme
(IRDP) which is funded by the Central and State governments on 50:50 basis.
The objective of the programme is to provide,to the target group of rural
families, a package of assistance comprising of income generating assets,
working capital, etc. through subsidy, institutional credit, etc. Special
insurance schemes are framed to protect thebeneficiaries of IRDP projects.
Under these policies, the rates of premium are lower and claims procedure is
simplified.

Whenever, the word scheme is used hereafter, it refers to these special

policies. Insurers will evolve appropriate strategies and plans to meet these
obligations

RURAL INSURANCE SCHEMES

CATTLE INSURANCE
Cattle Insurance was governed under Market Agreement as devised
by GIC and the rates, terms, conditions etc. all were applicable to all the
four Insurance Companies.
This policy covers indigenous cross bred and exotic cattle owned by
private owners, various financial institutions, dairy farms, cooperatives,
corporate dairies etc. The word cattle includes Milch, Cows and Buffaloes
calves and heifers, stud bulls, bullocks and he-buffaloes and mithuns. Age
group is specified for all the animals.

SHEEP AND GOAT INSURANCE

This scheme is also governed under Market Agreement. Policy provides
indemnity to indigenous cross-bred and exotic sheep and goat against

death due to accident (including fire, lightening, flood, cyclone, famine,

strike, riot and civil commotion) and disease. Earthquake and landslide
covers are also provided. Standard and common exclusions apply as per
Cattle Policy. Animals are identified by means of small brass buttons ear
tags. Animals under scheme category enjoy certain benefits in premium
rate and claim
CAMEL INSURANCE
The camels are covered against death due to accident or disease as per
Standard Cattle Insurance Policy. The maximum S.I. is restricted to
Rs.3000/-.
PIG INSURANCE
All indigenous, cross-bred and exotic pigs are covered however under
scheme category exotic animals are not covered. The age group is from 4
months to 3 years. The coverage is against death due to accident or
disease.Exclusions as per Cattle Policy apply here also. Permanent total
disablement, breeding and furrowing risks are not covered. Vaccination in
applicable diseases is compulsory. Evaluation depends upon the age of the
animal. Animals are identified by means of small brass buttons ear tags.

HORSE, MULE, DONKEY, PONY, YAK

INSURANCE
The Coverage is as per Standard Cattle Policy. However the age group is
restricted to 2 years to 8 years.

 POULTRY INSURANCE
This is also governed by Market Agreement, amongst all the four subsidiary
companies. The policy shall provide indemnity against death of birds due to
accident (including fire, lightning, flood, cyclone, strike, riot and civil
commotion and terrorism) or diseases contracted or occurring during the
period of insurance. The word Poultry includes layers, broilers and hatchery
birds, which are exotic and cross-bred.
Indigenous and non-descript birds will not be insured

DUCK INSURANCE APPLICABILITY

i. All types of Migratory and Non-migratory birds in India.
ii. Duck farms consisting of minimum of 100 ducks for nonIRDP and 50 ducks for IRDP and other Government
subsidized schemes.
Note: All birds in Duckery Farm should be insured Duck Insurance Scheme
shall provide indemnity against death of ducks due to accident including
lightning, flood, cyclone, famine, riot and strike, civil commotion or diseases
contracted or occurring during the period of insurance.

ELEPHANT INSURANCE

This scheme is applicable to elephants used for commercial and religious

purposes. This policy covers death due to disease or accident and the
coverage is given from 5 to 60 years of age. Identification is done from the
records of forest department of the State Govt. and also by measuring the
trunk of each elephant. Valuation of the elephant varies from breed to
breed, area to area and time to time. Exclusions are as per Cattle Market
agreement and some specific exclusion are as per policy schedule.
Company indemnifies the insured only 80% of market value or sum insured
whichever is less.

FAILED WELL INSURANCE

The scheme is applicable only to those wells financed by banks where refinancing by NABARD is involved and in other case where wells are
financed by a nationalized bank but not re-financed by NABARD, approval
of Head Office is must .Sum Insured, premium, perils covered and
exclusions are different in both the schemes and as per policy schedule

HONEYBEE INSURANCE SCHEME

This policy is to cover beehives and/or colonies belonging to individual,
cooperative societies and those sponsored and subsidized under various
projects of respective State and Central Government against total loss
damage to beehives and/or bee colonies as a result of an accident caused
by fire, flood, inundation, storm, tempest, cyclone, hurricane and tornado.
This cover is only for Indian Honeybee and Italian Honeybee. Sum insured

depends upon the cost of Beehives as given by the respective state KVIC
Board or

Crop insurance
Crop insurance is purchased by Rural producers, including farmers,
ranchers, and others to protect themselves against either the loss of their
crops due to natural disasters, such as hail, drought, and floods, or the loss
of revenue due to declines in the prices of Rural commodities. The two
general categories of crop insurance are called crop-yield insurance and
crop-revenue insurance.

NABARD contribution in rural insurance

The National Bank for Agriculture and Rural Development (NABARD) is the apex
organization with respect to all matters relating to policy, planning and operational
aspects in the field of credit for the promotion of, agriculture and allied activities in
rural areas. The bank provides refinance to various banks for their term lending
operations for the purposes of agriculture and rural development. The National Bank
of Agriculture and Rural Development (NABARD) has emerged as an apex
refinancing institution for agricultural and rural credit in the country since July,
1982. It has taken over the refinancing functions from the Reserve Bank of India with
respect of State Cooperative Banks and Regional Rural Banks. It has also taken
over the ARDC (Agricultural Refinance and Development Corporation), Developing a
strong and efficient credit delivery system which is capable of taking care of the
expanding and diverse credit needs for agriculture and rural development was a task
that received the attention of NABARD. NABARD, is involved in the implementation
of projects assisted by World Bank and its affiliate, the International Development
Association (IDA). There are some other International Aid Agencies which provide
assistance to NABARD in respect of various projects. NABARD has been
associated with the implementation of 42 projects with external credit out of which
38 projects are assisted by World Bank and its affiliate, i.e. IDA and
International Bank for Reconstruction and Development (IBRD).

Need of Rural Insurance:

Increase in credit finance in the rural areas.

 Increase in income and assets of rural poor.

Availability of information for decision making.