INTRODUCTION

Insurance is a form of risk management in which the insured transfers the cost of
potential loss to another entity in exchange for monetary compensation known as the
premium.

Insurance allows individuals, businesses and other entities to protect themselves against
significant potential losses and financial hardship at a reasonably affordable rate. We
say "significant" because if the potential loss is small, then it doesn't make sense to pay
a premium to protect against the loss. After all, you would not pay a monthly premium
to protect against a $50 loss because this would not be considered a financial hardship
for most

Insurance is appropriate when you want to protect against a significant monetary loss.
Take life insurance as an example. If you are the primary breadwinner in your home,
the loss of income that your family would experience as a result of our premature death
is considered a significant loss and hardship that you should protect them against. It
would be very difficult for your family to replace your income, so the monthly
premiums ensure that if you die, your income will be replaced by the insured amount.
The same principle applies to many other forms of insurance. If the potential loss will
have a detrimental effect on the person or entity, insurance makes sense

Everyone that wants to protect themselves or someone else against financial hardship
should consider insurance. This may include:

Protecting family after one's death from loss of income

Ensuring debt repayment after death

Covering contingent liabilities

Protecting against the death of a key employee or person in your business

Buying out a partner or co-shareholder after his or her death

Protecting your business from business interruption and loss of income

Protecting yourself against unforeseeable health expenses

Protecting your home against theft, fire, flood and other hazards

Protecting yourself against lawsuits

Protecting yourself in the event of disability

Protecting your car against theft or losses incurred because of accidents

 And many more

HISTORY OF INSURANCE
Insurance is a form of risk management, primarily used to hedge against the risk of a
contingent loss. In essence, insurance is simply the equitable transfer of a risk of a loss, from
one entity to another, in exchange for a premium.

Gambling transactions also hedge against risk, but it offers the possibility of either a loss or a
gain. Gambling creates losers and winners, whereas in insurance offers financial support
sufficient to replace loss, not to create pure gain. Gamblers can continue spending, buying
more risk than they can afford , but insurance buyers can only spend up to the limit of what
carriers would accept to insure their loss is limited to the amount of the premium.

Gamblers, by creating new risk transfer, are risk seekers. Insurance buyers are risk avoiders,
creating risk transfer in terms of their need to reduce exposure to large losses.

These associations afforded members (or their dependants) assistance in case of loss caused
by perils such as fire, shipwreck, theft, sickness or death. Originally, the extent of the
assistance was determined by the actual need of the member who suffered the loss,
eventually, however, he would be assisted to the extent of his actual loss. In many of these
guilds individual members, and not merely the guild itself, were under a legal duty to assist
those members who suffered a loss. Once provision was made for the latter to have a
corresponding legal right to claim such assistance, the development towards proper mutual
insurance was completed.

On 3 December 1591, one hundred Hamburg house-owners concluded the so-called

Hamburg fire contracts, which are generally regarded as some of the first examples of true
mutual insurance contracts that we have today.
By the end of the 17th century, three London societies were actively engaged in the business
Nicholas Barbon's "Fire Office" (later known as the "Phoenix Fire Office") was established
in 1680, the "Friendly Society" established in 1683, and the "Hand-in-Hand" Office. (The
Hand-in-Hand was originally formed in 1696 in Tom's Coffee House as the 'Amicable
Contribution ship for the Insurance of Houses against Fire', but the name was changed after
the company adopted an emblem of two hands joined beneath a crown. It still exists as part of
the CGNU insurance conglomerate, but is being rebranded to AVIVA.plc).

The first insurance company in the United States underwrote fire insurance and was formed
in Charles-Town (modern-day Charleston), South Carolina, in 1732.

The insurance companies had a rude awakening in 1835 when the New York fire struck. The
losses were unexpectedly high and they had no reserves prepared for such a situation. As a
result of this, Massachusetts lead the states in 1837 by passing a law that required insurance
companies to maintain such reserves. The great Chicago fire in 1871 reiterated the need for
these reserves, especially in large, dense cities.

Reinsurance - whereby losses can be distributed among many carriers - was devised, a plan
not unlike the Chinese farmers' solution a thousand years earlier. This system is now
commonly used in all types of insurance.

Insurance had become accepted practice. Farmers wanted crop insurance. Travellers wanted
travel insurance. Everybody turned to insurers to buy peace of mind.

Mechanically propelled vehicles were not used on the roads of the UK to any great extent
before the beginning of the 20th Century and, consequently, car insurance is of more recent
origin than fire, theft and general liability insurance.

To make a long story short, insurance (today) is being conducted over a vast array of "lines of
business" that encompass personal, commercial, marine, aviation, agriculture, life, health,
financial and engineering insurance. Virtually anything - from the mundane to the bizarre -
can be insured, as Lloyd's is famous for insuring the life, health, legs or even noses of
actors, actresses and / or sports figures.

Types of Insurance
Based on Todays life style the list of types of insurance is increasing day by day. You will
find a lot many numbers of new insurance policies which you might have not heard before.
One of the most important and compulsory insurance for vehicle owners is: third party
insurance. Read about insurance companies in India. The main types of insurance policies
available in the market are:

Life Insurance:

In this policy, the insurance company pays in case of the demise of the policy holder
or at the time of the maturity of the policy. Now a days a new policy has been launched by
insurance companies in which you will be covered under the insurance policy even after
the maturity of the policy. Read what are the different types of life insurance and which
one is good for you.

Property Insurance:

This insurance helps you to prevent the losses against theft, fire, burglary or any
natural calamity like Earthquake, Floods etc. based on the points mentioned in the policy.

Health Insurance:

Health Insurance consists of a package of various types of insurance related to health.

For example Medical Insurance is one the major part of health insurance however in most
of the cases, dental issues are not covered in this policy so there is another Dental
Insurance policy which covers dental problems and is also a part of health insurance. The
subcategory of health insurance also involves the injuries or accident at workplace
insurance benefits.

Auto Insurance:
 Any financial loss due to accident of a vehicle is covered under the auto insurance
policy. Sometimes the expenses on the medicines for treating injuries and all other
medical expenditure are also covered under this policy.

Travel Insurance:

Loss of personal belongings while traveling, medical coverage, delays in the travel are
all part of the travel insurance policy.

Insurance at Amusement Points:

This is a one of the new kinds of insurance policy (not very popular in India) where in
you are insured against the equipments that you are using at the amusement joints. For
example: if you are using boats for an independent boat ride , then they will charge you
with some extra money for an property loss(say $5) and in case of any property damage
you will not be liable to pay any amount required to repair the damaged property.

Credit Insurance:

This type of insurance pays the loans of the policy holder in case of any accident of
the policy holder or job loss or death.

Third Party Insurance:

This type of insurance covers damages caused by you (first party) to others (third
party). For more details visit third party insurance.

Apart from these above mentioned insurance policies there are many other types of insurance
policies in the market (and the list keeps on increasing) that are more or less related to these
policies however providing benefits to the policy holders in a different and unique way.
RURAL INSURANCE

INTRODUCTION
Under the provisions 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 unorganised 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
kilometre, 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 labourers, etc. Since 1980, all these programmes have been
integrated into Integrated Rural Development Programme (IRDP) which is funded by the
Central and State Governments.

Rural production and farm incomes in India are frequently affected by natural disasters such
as droughts, floods, cyclones, storms, landslides and earthquakes .Susceptibility of rural to
these disasters is compounded by the outbreak of epidemics and man-made disasters such as
fire, sale of spurious seeds, fertilizers and pesticides, price crashes etc. All these events
severely affect farmers through loss in production and farm income, and they are beyond the
control of the farmers. With the growing commercialization of rural, them agnitude of loss
due to unfavourable eventualities is increasing. The question is how to protect farmers by
minimizing such losses. For a section of farming community, the minimum support prices for
certain crops provide a measure of income stability. But most of the crops and in most of the
States.

MSP is not implemented. In recent times, mechanisms like contract farming and future
trading have been established which are expected to provide some insurance against price
fluctuations directly or indirectly. But, Rural insurance is considered an important mechanism
to effectively address the risk to output and income resulting from various natural and
manmade events. Rural Insurance is a means of protecting the agriculturist against financial
losses due to uncertainties that may arise Rural losses arising from named or all unforeseen
perils beyond their control (AIC, 2008). Unfortunately, rural insurance in the country has not
made much headway even though the need to protect Indian farmers from rural variability
has been a continuing concern of rural policy. According to the National Rural Policy 2000,
Despite technological and economic advancements, the condition of farmers continues to be
unstable due to natural calamities and price fluctuations. In some extreme cases, these
Unfavourable events become one of the factors leading to farmers suicides which are now
assuming serious proportions (Raju and Chand, 2007). Rural insurance is one method by
which farmers can stabilize farm income and investment and guard against disastrous effect
of losses due to natural hazards or low market prices.

Crop insurance not only stabilizes the farm income but also helps the farmers to initiate
production activity after a bad rural year. It cushions the shock of crop losses by providing
farmers with a minimum amount of protection. It spreads the crop losses over space and time
and helps farmers make more investments in rural. It forms an important component of
safety-net programmers as is being experienced in many developed countries like USA and
Canada as well as in the European Union. However, one need to keep in mind that crop
insurance should be part of overall risk management strategy. Insurance comes towards the
end of risk management process. Insurance is redistribution of cost of losses of few among
many, and cannot prevent economic loss. There are two major categories of Rural insurance:
single and multi-peril coverage. Single peril coverage offers protection from single hazard
while multiple.

Review of Literature
Ramakrishna Reddy & Ch. Krishnudu Dec 2009 on investment behaviour of rural
investors in their study states that the investment culture among the people of a
country is an essential prerequisite for capital formation and the faster growth of an
economy. Investment culture refers to the attitudes, perceptions, and willingness of
the individuals and institutions in placing their savings in various financial assets,
more popularly known as securities. A study on the investors perceptions and
preferences, thus, assumes a greater significance in the formulation of policies for the
development and regulation of security markets in general and protection and
promotion of small and house-hold investors in particular.

Rajarajen Vanjeko December 2010, Finance India on Indian investors investment

characteristics showed that the use of these characteristics for a better understanding
of individual investors and their financial product needs. It also shows that investors
future preferences. The study reveals the increasing popularity of equity as an
investment option among individual investors.

Sushant Nepal and B. S. Bola June 2009 on impact of investors lifestyle on their
investment pattern: an empirical study states that the modern investor is a mature and
adequately groomed person. Occasions of blind investments are scarce, as a majority
 of investors are found to be using some source and reference groups for taking
decisions.

Ramprasath .S and Dr. B. Karthikeyan , December 2013, on individual investors

behaviour towards select investments, states that the majority of the investors are
giving much importance for the factor safety. Similarly investment avenues such as
Bank deposits, LIC polices and Bullion has been preferred by the individual investors.
Similarly the majority of the investors are periodically evaluating the performance of
their investment avenues.

A Sarangapani and T. Mamatha on investment pattern of Indian investors (July 2011)

assessed in their research, investment pattern of sample investors indicates that the
majority investors prefer to invest in equity shares than in other instruments. It is also
revealed in analysis of the portfolio of investors that 72% investors prefer to invest in
different types of instruments and the rest only in equity shares. The portfolio size of
convertible debentures is comparatively more than non-convertible debentures in
Hyderabad city.

Dr. Ganapathi & Ms. S. Abu Malar on investor attitudes towards post office deposit
schemes (July December 2010) assessed in their research, the various small savings
schemes are mainly meant to help the small investors and also those who are I n high
tax brackets. Proper advertisement must made for post office savings schemes. So that
even a layman comes to know about these schemes and deposits can be increased.
Investing our amount in post office deposits schemes ensures high rate of return and it
provides safety and security for the amount invested.

Suresh Chandra Bihar & A pour Raj on investment behaviour of the customers
towards mutual fund and other products (Jan June 2013) assessed in their research,
commercial sources are attracting and helping more consumers to take decision. At
the same time personal sources are also adding value to their decision making process.
Magazines, newspapers, film, advertisement, display, demonstration, exhibition and
colleagues play a vital role in searching meaningful information.

M.R. Sholapur and A.B. Kushner on a study on individual investors in selected

investment avenues. (April 2008), assessed in their research investors strongly agree
on the perceptions in the case of bank deposits (80%) life insurance policies (65%) .
on the other hand (54%) disagree on in the case of corporate securities. The perceptual
gaps analysis presents certain revelations corporate securities are less preferred;
government securities do not provide regular and steady income; investment in
insurance policies appreciate in values; bank deposits require more transaction costs
etc. there is a need to help investors develop a right perspective of the investment
schemes and their attributes.

By sunnykutty Thomas and Rajesh M.N on Investment pattern of rural Investors in

Kerala under (NEP).(Apr 2009) assessed in their study the vast and drastic changes
are to be found in investors behaviours and motives of investors under present
 economic scenario. In that situation, rural investors in Kerala also adopted a new
investment pattern under the present economic crisis.

OBJECTIVES OF STUDY

To estimate price/ yield risk involved in different crops at national level and at
disaggregate level

To examine the performance of the existing and earlier national Rural insurance
schemes implemented in India

To discuss and explore the problems and prospects of rural insurance in the country

To look into the role of government in implementing various Rural insurance schemes

To suggest effective rural insurance programme in India.

Headed up by Rural MD Lance Harvey, the company experienced steady growth in the late
1990s and soon became a well-known provider of specialist agricultural and rural insurance
in the UK. By 2008 Rural Insurance head office in Harrogate had grown to 45 staff with a
GWP of 18 million.

In May 2008, Rural Insurance launched Rural Online, an online quote and buy for brokers
offering Equine, Smallholders and Personal Accident cover, accelerating growth in the
second half of 2009 to over 20 million GWP.

In 2009 Rural Insurance became part of the newly formed UK General Insurance Group one
of the largest specialist insurers in the UK. The UK General Group now writes in excess of
200 million GWP, trading with over 2,500 brokers and affinity trading partners in the UK.

Rural Insurance continues to grow and is now one of the UKs leading agricultural insurance
providers with ambitious plans for future growth. Working exclusively with independent
brokers Rural Insurance offer a range of agricultural and rural insurance solutions.

Scope of Rural Insurance

The scope of rural insurance is very high although it is poorly realised. Rural areas having 70
percent of total population, livelihood to two-third of the total population, supply of raw
materials to industrial production and other economic activities have compelled the insurance
educators to make the insurance companies enter in the rural population.

The agriculture is full of vagaries and natural calamities, which impede the sustainable
growth of the country by sustaining agricultural development. The natural risks and disasters
have pulled back the rural development.

Therefore, there are dire needs of insurance of rural risks. Crop insurance, cattle insurance,
life and property insurance, general insurance etc. have abundant scope of development

NEEDS

INSURANCE has thus far been mostly city-oriented. But things are happening in the rural
areas where human life and income-generating rural assets need protection, and there is
tremendous scope for developing insurance business. Now that the insurance sector is open to
the private sector and foreign companies, the Government should pay serious attention to
covering the rural areas.

While it is true that access to insurance cover depends on the literacy/awareness levels and
assured income, well-planned and organised efforts by committed private sector companies
can yield rich dividends from the rural areas. This is because:

(1) A large number of rural districts have witnessed significant growth and prosperity;

(2) Access to reliable and authentic data and information has improved considerably, which
can enable quick and correct decision-making;

(3) There are specific functionaries and agencies in the rural areas which can help explore and
exploit insurance business in the untapped rural market.

The number of families living below the poverty line has considerably declined in Punjab
(11.7 per cent), Goa (14.9 per cent), Andhra Pradesh (22.2 per cent), Himachal Pradesh (23.4
per cent), Gujarat (24.2 per cent), Haryana (25.0 per cent), J&K (25.2 per cent), Kerala (25.4
per cent) and Rajasthan (27.4 per cent) -- much below the national average of 35.97 per cent
in 1993.

Rural banking as catalyst

While public investment in agriculture has declined to 16.2 per cent, the rural banking system
has been encouraging farm development through provision of credit facilities for production
of crops including horticulture, plantation, forestry; purchase of farm equipment; livestock
and fish farming; irrigation facilities and installation of diesel engines, and so on.

Bank credit is also provided for establishing village/cottage industries, stocking/supplying

farm inputs and cattle-feed, and business and trade purposes. From 1969-70 to 1999-2000, up
to Rs 3.1 crore has been provided to the farm sector.
With enhanced incomes, and further supplemented by bank credit, the rural population is
acquiring consumer durables, constructing houses, purchasing vehicles, computers, and so
on.

All these assets need to be protected from damage/loss, natural or manmade. Thus, the rural
areas offer enormous opportunities for committed private insurance companies in both life
and non-life insurance schemes.

This will, in turn, help create more that would have direct impact on rural development and
the country's economic growth, in general. In fact, insurance in the farm sector should benefit
from the advances of science and technology as well.

LIC in the last decade has evolved a number of products which, however, do not suit the
needs of the rural areas. Similarly, the four GIC subsidiaries have also been providing
insurance cover for specific kinds of assets owned by rural households through bank credit.
But more has really put in the required marketing effort in the villages. The claim lodgement
and settlement procedure is time-consuming and cumbersome. Cattle insurance under the
government-sponsored Integrated Rural Development Programme and crop insurance (till
now covering banks' loans) have not met with the expected results.

Valuable data and information on rural areas has been available on the rural areas through the
publications/surveys of the Central Statistical Organisation, National Sample Surveys,
National Council of Applied Economic Research, and so on. From 1989, the National Bank
for Agriculture and Rural Development has been formulating Potential Linked Credit Plan,
and the Lead Bank has been the Annual District Credit Plan that give considerable insights
into the Government's plans for farm and rural sector development.

Besides, the village profile available with each of the branches of nationalised/public sector
banks contain exhaustive data on the population, cultivating households, categories of
farmers, classification of workers, livestock, cropping pattern, farm equipment and machinery
and so on.

There are more than 1,75,000 rural credit outlets in addition to the offices of the District
Rural Development Agency, the District Industries Centre, the District Development Manager
of nationalised banks and Lead District Manager of the Lead Bank. All these institutions and
agencies can offer considerable information to insurance companies.

Firms interested in developing rural insurance can: *Identify insurance products best suited to
rural elite/rich as well and rural households.

*Evolve area- and client-specific products.

*Design a method and system for fixing and collecting premium, and claim settlement
procedure to ensure customer-friendly services.

Educated unemployed youths of the villages can be trained and become valuable assets for
the companies. While 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
exploited.
The Centre 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 man-made calamities. For this purpose, reasonable and nee d-based
concessions/reliefs in taxations and subsidies, required infrastructural facilities and
administrative support must be extended, at least for ten years. The government may consider
appointing an Expert Committee on Rural Insurance to work out the modalities for private
and foreign companies interested in entering the rural areas.

Need a rural insurance

It's always best to be prepared for unfortunate circumstances and this is why you should
consider getting a rural insurance policy. A rural insurance policy will shield you from
financial ruin in case accidents happen. Getting rural insurance will also give you added
security
1. Guaranteed Surrender Value
2. Maturity Benefit
3. Death Benefit
Need a Rural Insurance Policy
It's always best to be prepared for unfortunate circumstances and this is why you should
consider getting a rural insurance policy. A rural insurance policy will shield you from
financial ruin in case accidents happen. Getting rural insurance will also give you added
security
Increase in credit finance in the rural areas o Increase in income and assets of rural
poor.

Availability of information for decision making.

Design tailored products.

Establish efficient methods of premium collections and claims settlements.

Types of rural insurance

Property Insurance
Many farmers use property insurance in order to protect rural dwellings, barns,
stables, silos and farm equipment. Farm property insurance can also cover
loaned property. Livestock are typically considered property, and as a result
insurance companies like State Farm provide compensation if livestock are
accidentally shot, drowned, attacked by wild animals or electrocuted.
Types
 Single-Family Home

The most common definition of a single-family home is: An individual, freestanding,

unattached dwelling unit, typically built on a lot larger than the structure itself, resulting in an
area surrounding the house, known as a yard. A derivative of this definition includes the
single-family unit that has a condominium ownership structure. In this case, the land
associated with whole ownership of the home comprises only that which supports the
structure's foundation. In other words, the "yard" is co-owned in common with the rest of the
residents of the community. In many markets, adjacent units that share walls and other
structural components are considered to be single-family homes. While these homes have
separate access to the outside and do not share plumbing or heating equipment, they do not
meet the strict definition of a single-family home and are considered part of the multi-family
genre.

Land Lease
A land lease is a type of financial arrangement in which the ground under a structure is
leased, rather than sold. In this regard, the land and the structure are owned separately and
independently by more than one entity. This practice occurs most commonly when an
investor wants to retain title to the land but does not necessarily wish to be the developer. The
investor might work with a developer to build a structure and rent or sell it, with the
understanding that the land is leased and does not come with the building. This type of
arrangement is common with respect to farms in rural areas, while in urban areas it is often
associated with cooperatives or tenant-owned residences. Land leases are also prevalent in
mobile home parks where the housing is not permanently anchored to the land, and resorts,
particularly that portion dedicated to the amenities, may be constructed on land leased from a
third-party or a local government. In this regard, any condo-hotel units or private residences
located within the resort may be subject to the terms of the lease as well. Lease terms
generally range upward to 99 years.

Security
Security is a major issue with respect to today's living conditions, and in this regard, nearly
all newer subdivisions, master-planned communities, and PUDs are now gated. The term
"controlled access" refers to a manned gate or an electronic gate that lifts when a qualified
auto with an electronic device or sticker approaches, or upon the insertion of a dedicated key
card. A manned gate is typically operated by a full-time staff, generally supported by a
computer system that provides the names of all residents that have property access, and
accommodates guest access by resident request. Roving security guards are often employed
to maintain a sense of safety on a 24-hour basis. Security staff services are typically procured
from an outside resource and become an expense to the HOA. In the alternative, community
watches are often established utilizing the volunteer services of the residents.
Common Area
In condominium and cooperative housing projects, common areas are those that are not
owned by an individual owner of a residential unit but shared by all owners, either by a
percentage interest or owned by the management organization (HOA). In multi-family
projects, such as condominium apartment buildings, the common areas can include the lobby,
hallways, parking garages, laundry rooms, gathering spaces, etc. In residential communities,
common areas may include recreational facilities, clubhouses, community centers, parks and
other outdoor open space, parking, landscaping, fences, and all other jointly used space.
Management of the common areas is the responsibility of the homeowners' association or the
cooperative Board of Directors, which collects assessments from the owners that are applied
to the maintenance, insurance, and reserves for replacement of improvements within the
common areas

Liability Insurance

Farming presents a number of liabilities that can be financially devastating. If

someone working on a farm becomes injured on a job, for example, liability insurance
will help cover medical and bodily injury damages. Farm liability insurance also
protects farmers if they end up polluting nearby properties due to pesticide or animal
manure runoff. Additionally, if livestock escapes from a fence and injures another
person's body or property, rural liability insurance will protect the owner of the
livestock from fiscal damages.

There are various types of liability insurance coverage offers by the insurance
companies.
1. The first one is employers liability coverage which is covered the employee to get the
protection on the work. It is enforced by the law to get the proper coverage to the
employee under the employers liability policy to give the proper coverage.
2. The second one is public liability coverage, which covers by any damage of public
properly. It is important to get the coverage based on the types of coverage you required
under the public liability coverage.
3. The third one of product liability coverage. It gives protection to the manufacturers by
way of the coverage. It is called the product liability coverage and it will cover you
against any damage or injury due to products.
4. The fourth types of coverage are directors and officers insurance to give protection
against any lawsuits against the officers or the company to get the proper coverage.
5. The fifth one is professional coverage. It gives protection to the professionals against
any claims. It is necessary to get the professional liability coverage.
It is one of the most important tasks for you to get the suitable coverage as per your
needs. Based on your needs you require for getting the coverage as per your needs.

Vineyard Insurance
 Winery owners are also usually located in a rural area. While they may take out a
generic crop insurance policy in order to protect a harvest, vineyard owners usually
require an insurance plan tailored to the entire wine making process. For example,
stored wine can become damaged or wine tanks can explode, causing financial
damages. Also, vineyards that offer public tastings may require liquor liability
insurance. Comprehensive winery insurance policies provide complete coverage
throughout the wine making and selling process.

Even though producing high-quality wine may seem a piece of cake for someone who
is not involved in this type of business, if you own a vineyard, you definitely know
how much work this process requires.

But in order to obtain the quality wine you desire, it is not only you and your family
who has to work hard. In fact, taking care of a vineyard implies a lot of time and
money, as you need special equipment, qualified staff, viticulture knowledge,
marketing strategies, and so on. All these together can contribute to the success of
your company, and are essential for any wine business.

However, besides the benefits of owning a vineyard, there are also plenty of risks that
need proper management. Without good vineyard insurance, you might be facing
damages that you cannot cover and then you business will suffer.

Equine Insurance
Some rural ranchers offer horse riding lessons to children. Riding schools carry a lot
of equine personal liability insurance due to the damages that a horse can cause.
People who board horses usually obtain care, custody and control (CCC) insurance,
which provides financial compensation to the boarder if a horse becomes injured or
dies and the business owner is found to be responsible. Horse trainers also carry CCC
insurance for the same reason.

Types
Major medical.
If you have a major medical insurance policy for yourself, you automatically have a
basic understanding of how it works for horses. Equine medical insurance covers
veterinary costs such as diagnostic procedures, surgery, medication and veterinary
visits associated with an illness or injury. Most policies have a deductible for each
incident, and all have a limit on the amount the policy will cover per incident and per
horse per year. These policies are reviewed for renewal by the insurance companys
underwriters each year and are subject to exclusions. For example, if your horse colics
 and needs surgery, and your insurance company pays a portion of your vet bill, the
policy may not cover colic when its renewed the following year.

Some insurance companies require a veterinary health certificate as proof that your
horse has no pre-existing conditions before you take out the policy; anything related
to these conditions will be excluded from the policy. All insurance companies have
limits on age, too. Although it varies by company, if your horse is age 15 or older,
youll have a tough time finding major medical insurance that will cover him.

2. Surgical.

Unlike major medical policies, which cover all types of veterinary costs, surgical
policies only come into play if your horse needs an operation. They cover expenses
directly related to the surgery, such as the surgeons fee and the price of the aesthetic
used on the horse during the procedure. They dont cover the cost of the hospital stay
before and after the procedure, which can be a large part of the bill. However, if major
medical insurance is out of your price range, surgical is the next best thingand
better than no insurance at all.

3. Full mortality.

When you take out a major medical or surgical policy on your horse, insurance
companies also require that you purchase full mortality insurance (and vice versa) to
make sure that you will do everything possible to save your horse. Should your horse
die from an illness or accident, or if he is stolen and not recovered, full mortality
insurance will reimburse you the previously stated value of the horse, determined at
the time your horse is insured. Keep in mind that if your horse is older than 15, you
may have trouble finding full mortality coverage.

4. Limited mortality.

If your horse dies as a result of an accident or another specified cause, limited

mortality insurance will reimburse you the value of the horse. You dont need to have
a medical or surgical policy in place in order to purchase this type of insurance.

Most people who purchase limited mortality insurance do so because they have
special circumstances that place their horse at risk of an accident. If you are shipping
your horse cross-country, for example, you may want to purchase a limited mortality
policy. If your horse happens to die in a trailer accident during shipping, the insurance
company will pay you the declared value of the horse.

5. Loss of use.
Loss of use insurance protects you if your horse is injured or becomes ill to the point
where he can no longer do what you bought him forusually riding. The insurance
company pays out a predetermined sum, which is based on an amount of money
agreed to by both you and the company. You also need to carry major medical
insurance when you take out a loss of use policy.
 Although loss of use insurance sounds like a good idea, it can be very difficult to
collect on these policies because its not easy to prove to the insurance company that a
horse is no longer useful for its specified purpose. Some policies also require that the
owner euthanize the horse or turn it over to the insurance company in order to collect.

6. Personal liability.

Similar to the liability coverage in a homeowners policy, personal liability insurance

protects you in the event your horse injures someone or damages property.

Many people find this type of insurance provides peace of mind, especially if their
horses spend time around a lot of different people. Before you purchase this type of
insurance, make sure your homeowners policy doesnt already include this kind of
coverage.

RURAL INSURANCE | | BENEFITS | ADVANTAGES

India is predominantly an Rural country so it becomes important to insure its Rural heritage.
Farmers are the cultivators of healthy India. Rural Insurance is the answer to all the needs of
Rural and rurally based Businesses.

None of us can be sure what tomorrow will bring. Shield your families against the unknown.
MetLifes rural plans protect your loved ones against financial liabilities and help you save
for tomorrow. All at affordable premiums.

Met Suvidha (Rural) is a participating flexible Endowment Plan that combines savings and
security. In addition to providing you protection up to maturity, it helps you save for your
specific

long term financial objectives. This long term savings-cum-protection plan comes to you at
affordable premiums.

BENEFITS

Death Benefit
In the event of death during the term of the policy, the beneficiary will receive the base Sum
Assured, the accrued reversionary bonus and terminal bonus if any.
In the unfortunate event of death due to an accident the Rider Sum Assured is paid and the
policy is terminated

Maturity Benefit
On maturity of the policy, you will receive the base Sum Assured, the accrued reversionary
bonus and terminal bonus if any.

Bonuses
Bonuses are available only on participating policies. The bonuses are not guaranteed as they
are based on the Companys actual investment returns, persistency and expense experience.
No bonus is payable for the first 2 years of the policy.

ADVANTAGES

It is an Endowment plan that offers both savings and life insurance.

Flexible premium paying options to suit various income cycles.

A plan which participates in the bonuses declared by the company.

Customization possible with Accident Death Benefit, Critical Illness, Term, Waiver of
Premium Riders for comprehensive protection.

Rural people live in beautiful natural surroundings.

The air that the rural people breathe is pure.

The food that the villagers take is fresh.

Peace and quiet fill the rural life.

Villagers love our neighbors as our own. Life is simple and natural.

DISADVANTAGES:

In distant rural areas, the roads are extremely bad and transport difficulties are great.
 Rural people are generally poor and ignorant of the rules of health and hygiene.

For want of proper education, they become narrow-minded and superstitious.

There are few doctors and few hospitals.

Rural life & general insurance

Life insurance
Life insurance (or life assurance, especially in the Commonwealth), is a contract between an
insurance policy holder and an insurer or assurer, where the insurer promises to pay a
designated beneficiary a sum of money (the benefit) in exchange for a premium, upon the
death of an insured person (often the policy holder). Depending on the contract, other events
such as terminal illness or critical illness can also trigger payment. The policy holder
typically pays a premium, either regularly or as one lump sum. Other expenses (such as
funeral expenses) can also be included in the benefits.
Life policies are legal contracts and the terms of the contract describe the limitations of the
insured events. Specific exclusions are often written into the contract to limit the liability of
the insurer; common examples are claims relating to suicide, fraud, war, riot, and civil
commotion. There are many different variables to insurance policies. Below are some of the
more common types.

Term life insurance:

Is the most basic, and often least expensive, form of life insurance for people under age 50. A
term policy is written for a specific period of time, typically 1 to 10 years, and may be
renewable at the end of each term. Also, the premiums will likely increase at the end of each
term and can become prohibitively expensive for older individuals.

Whole life insurance:

Combines permanent protection with a savings component. As long as you continue to pay
the premiums, you are able to lock in coverage at a level premium rate. Part of that premium
accrues as cash value. As the policy gains value, you may be able to borrow a portion of your
policy's cash value tax free, although loans accrue interest and reduce the policy's death
benefit and cash value, and may trigger a taxable event if the policy lapses.
Universal life insurance:
Is similar to whole life with the added benefit of potentially higher earnings on the savings
component. Universal life policies are also more flexible in regard to premiums and face
value. Premiums may be increased, decreased, or deferred, and cash values can be
withdrawn. You may also have the option to change the amount you are insured for, known as
the face amount. Universal life policies typically offer a guaranteed* return on cash value.
Premiums may be increased, decreased, or deferred, and cash values can be withdrawn.1

Variable life insurance:

Generally offers fixed premiums and the ability to invest your cash value in a choice of stock,
bond, or money market-based investment options offered by your insurer. Cash values and
death benefits can rise and fall based on the performance of your investment choices.

Although death benefits usually have a floor, there is no guarantee on cash values. Fees for
these policies may be higher than for universal life, and investment options may be volatile.
These investment options are subject to market risk including loss of principal.

Fully underwritten life insurance:

A life insurance medical exam is often required. The application will also generally include
many questions about your health, your familys health history, your lifestyle (such as
hobbies like skydiving), and your plans for travel outside the United States. This full
underwriting allows the insurance company to most accurately price the policy based on
your life expectancy. If you are healthy or even if you have a couple health issues this
will generally be the cheapest way to buy life insurance.

Simplified issue life insurance:

No life insurance medical exam is required, but you will be asked a few health questions and
you could be turned down based on your answers.

Guaranteed issue life insurance:

Theres no medical exam and no questions asked. You cant be turned down. This is the most
expensive way to buy life insurance, and you might find only low coverage amounts
available, such as $50,000 or $100,000. In addition, if you die within the first few years of
having the policy, your beneficiaries may receive only a partial death benefit or a check for
the premiums you paid. People often buy these policies when theyve been turned down
elsewhere but they want to cover final expenses, such as funeral costs.

There are also types of life insurance meant for specific situations:

Mortgage life insurance:

Covers specifically the current balance of your mortgage and pays out to the lender, not your
family, if you die.

Credit life insurance:

Covers only the balance of a specific loan, like a home equity loan. Your bank might offer to
sell you a credit life insurance policy when you take out a loan. If you die it pays off the
lender, not your family.

Accidental death and dismemberment (AD&D):

Pays a death benefit only if you die accidentally, such as in a car crash. Accidental death and
dismemberment policies also offer insurance payouts for loss of limbs, sight and hearing, and
other problems.

Joint life insurance:

This type of permanent life insurance insures two lives (usually spouses) under one policy
and comes in two forms:

First-to-die:

Pays out upon the death of the first person, whichever one it is. The surviving spouse
would typically be the beneficiary. The policy would then expire; it doesnt continue
to cover the second person.

Second-to-die
 Pays out when both people have died. A policy like this is typically used when heirs
(such as children) will need money to pay estate or inheritance taxes, so that they
dont have to sell off assets.

General insurance
General insurance covers insurance of property against fire, burglary, theft; personal
insurance covering health, travel and accidents; and liability insurance covering legal
liabilities. This category of insurance virtually covers all forms of insurance except life. Other
covers may include insurance against errors and omissions for professionals, credit insurance
etc. Common forms of general insurance are motor, fire, home, marine, health, travel,
accident and other miscellaneous forms of non-life insurance.
Unlike life insurance policies, the tenure of general insurance policies is normally not that of
a lifetime. The usual term lasts for the duration of a particular economic activity or for a
given period of time. Most general insurance products are annual contracts. There are
however, a few products which have a long term.

Types of General Insurance:

Motor Insurance
Motor insurance covers all damages and liability to a vehicle against various on-road and off-
road emergencies. A comprehensive policy even secures against damage caused by natural
and man-made calamities, including acts of terrorism.
Motor insurance offers protection to the vehicle owner against:

Damage to the vehicle

It also pays for any third party liability determined by law against the owner of the
vehicle

Motor insurance is mandatory in India as per the Motor Vehicles Act, 1988 and needs to be
renewed every year. Driving a motor vehicle without insurance in a public place is a
punishable offence.
In fact, third party insurance is a statutory requirement in our country i.e. the owner of the
vehicle is legally liable for any injury or damage caused to a third party life or property, by or
arising out of the use of the vehicle in a public place.

A comprehensive motor insurance policy would include personal accident and liability only
policy (third party insurance) in addition to own damage cover (damage to owners vehicle)
in one policy.
Common motor insurance categories include:
Car Insurance
Two Wheeler Insurance
Commercial Vehicle Insurance
Some attractive benefits of motor insurance include roadside assistance, cashless servicing at
nation-wide network of workshops and garages, personal accident cover, towing assistance.

Health Insurance
Health care costs are increasing every year. Sedentary lifestyle and stress at work negatively
affect the health and can result in a critical illness or medical emergency. Such a scenario is
sure to adversely affect one financially, due to the massive outlay of money on medical
expenditure. A health insurance policy is the only way to mitigate the financial risks, apart
from leading a healthy lifestyle. Health insurance guarantees peace of mind in times of crisis,
and helps secure own health and that of ones family.
Health insurance covers the medical and surgical expenses of the insured individual due to
hospitalization from an illness. Additional riders enhance the benefits and scope of the cover.
Health insurance often includes cashless facility at empanelled hospitals, pre and post
hospitalization expenses, ambulance charges, daily cash allowance etc.

Common types of health insurance policies include:

Individual Policy
Family Floater Policy
Surgery Cover
Comprehensive Health Insurance

Travel Insurance
International travel, whether on vacation or business, can turn into a nightmare if one
experiences contingencies like loss of baggage, loss of passport, delay in flight, medical
emergency etc. Such eventualities will surely take the fun away from travelling.
Travel insurance, also referred to as visitor insurance, covers one against unseen medical and
non-medical emergencies during overseas travel, ensuring a worry-free travel experience. It
protects the insured against misfortunes while travelling. Backed up by travel insurance, the
whole experience is like no other.
Different types of travel insurance policies include:
Individual Travel Policy
Family Travel Policy
Student Travel Insurance
Senior Citizens Travel Policy
In addition to the above, some insurance companies offer special plans like a corporate travel
policy or comprehensive policy for travel to special destinations like Asia and/or Europe.

Home Insurance
Home is often the most treasured possession of an individual and also the largest financial
investments one makes in life. Safeguarding the physical structure and contents of home
seems like a logical thing to do.
Home insurance protects the house and/or the contents in it, depending on the scope of
insurance policy opted for. It secures the home against natural calamities and man-made
disasters and threats. Home insurance provides protection against risks and damages from
fire, burglary, theft, flood, earthquakes etc. covering the physical asset (building structure)
and valuables (contents) in it.
Home insurance ensures that ones hard-earned savings are utilised to meet important needs
instead of using them for rebuilding the house if some harm was to come to it.

Marine (Cargo) Insurance

Business involves the import and export of goods, within national borders and across
international borders. Movement of goods is fraught with risk of mishaps which can result in
damage and/or destruction of shipments. This leads to substantial financial losses for both the
importers as well as the exporters.
Marine cargo insurance covers goods, freight, cargo and other interests against loss or
damage during transit by rail, road, sea and/or air. Shipments are protected from the time the
goods leave the sellers warehouse till they reach the buyers warehouse. Marine cargo
insurance offers complete financial protection during transit of goods and compensates in the
event of any loss suffered.
The party responsible for insuring the goods is determined by the sales contract. Marine cargo
insurance policy can be taken by buyers, sellers, import/export merchants, buying agents,
contractors, banks etc. The policy usually covers the cargo, but can also be extended to cover
the interest of a third party post transfer of ownership as determined by terms of sale.

Rural Insurance
Insurance solutions to meet the needs of agriculture and rural businesses form part of rural
insurance. IRDA has stipulated annual targets for insurers to provide insurance to the rural
and social sector.
As per these regulations, insurers are required to meet year-wise targets:
In percentage terms of policies underwritten and percentage of total gross premium
income by general insurers under rural obligation
In terms of the number of lives under social obligation

Commercial Insurance
Commercial insurance encompasses solutions for all sectors of the industry arising out of
business operations. Insurance solutions for automotive, aviation, construction, chemicals,
foods and beverages, manufacturing, oil and gas, pharmaceuticals, power, technology,
telecom, textiles, transport and logistics sectors. It covers small and medium scale enterprises,
large corporations as well as multinational companies.

Common types of commercial insurance:

Property Insurance
Marine Insurance
Liability Insurance
Financial Lines Insurance
Engineering Insurance
Energy Insurance
Employee Benefits Insurance
International Insurance Solutions

Other Types of General Insurance:

Property Insurance
Personal Accident
Householder
Shopkeeper
Corporate Insurance
Commercial Insurance
Fire Insurance
Crop Insurance

ISSUES RELATED TO RURAL INSURANCE

Issues Related to Rural Insurance

Issues related to rural are of two types. One, issues concerning or related to existing scheme
namely NAIS, and two, issues of general nature which go beyond the present mechanisms for
Rural insurance.

ISSUES RELATED TO NAIS

The farming community at large does not seem to be satisfied with the partial expansion of
scope and content of crop insurance scheme in the form of NAIS over Comprehensive Crop
Insurance Scheme (CCIS). There are issues relating to its operation, governance and financial
sustainability. After extensive reviewing, gathering perceptions of the farming community
and discussion with experts from AIC, Rural department, bankers, academicians and other
representatives in Andhra Pradesh on the performance of NAIS, some modifications have
been suggested in its designing to make to it more effective and farmer- friendly. Reduction
of insurance unit to Village Panchayat level As of now, the National Rural Insurance Scheme
is implemented on the basis of "homogeneous area" approach, and the area (insurance unit) at
present is the Mandal / Talk / Block or equivalent unit, in most instances. These are large
administrative units with considerable variations in yields and impact of natural calamities.
For the scheme to become more popular, the unit for determining claim should be reduced to
the level of village in the case of large villages and to cluster of villages in the case of
small villages. However, because of infrastructural and financial constraints States could not
lower the unit to village panchayat. Ideally, "Individual approach" would reflect crop losses
on a realistic basis, and has been regarded most desirable (Dandekar, 1985). However, under
the Indian conditions, implementing a crop insurance scheme at the "individual farm unit
level" is beset with problems, such as:

Non-availability of the past records of land surveys, ownerships, tenancy and yields at
individual farm level

Small size of farm holdings

Remoteness of hamlets and inaccessibility of some farm-holdings

A large variety of crops, varied agro-climatic conditions and package of practices, and
 Inadequate infrastructure.

We feel that lowering of the insurance unit to the Gram Panchayat (GP) level, is a welcome
move, as it would reflect yield losses at a reasonable level. However, data being the lifeline of
insurance, the actuarial rating of the product at GP level would be possible only if the
historical yield data at that level (GP) is available for a reasonably long period. In real 46

GENERAL ISSUES
Even several years after the initiation of first rural insurance project in 1972, the coverage
and scope of rural insurance remains far from adequate, even-though the need for various
forms of insurance for rural sector has been widely expressed. Some of the issues related to
expansion of rural insurance and improving its effectiveness are discussed below Role of
Government as mentioned before; crop insurance to be successful requires public support.
This could be in terms of subsidy on premium, meeting part of administrative expenditure,
and reinsurance etc. Global experience shows that due to special nature of rural production, in
several countries, premiums payable by farmers is subsidized by government. Rural in India
is not just dependent on weather conditions, but also suffers the brunt of natural disasters. It
will be quite in order for crop insurance to be regarded as a support measure in which
government plays an important role, because of the benefit it provides not merely to the
insured farmers, but to the entire national economy due to the forward and backward linkages
with the rest of the economy. Society can significantly gain from more efficient sharing of
crop and natural disaster risks. The principles behind the evaluation of crop insurance
schemes all over the world are along these lines for receiving the active support and finance
of the Government. Integrating the various risk mitigation methods and streamlining the
funds not only injects accountability and professionalism into the system, but also increase
economic efficiency. The support mechanism of major countries is given in the Table 7.1.
Government can facilitate rural insurance in several ways. In case farmers are asked to pay
full premium themselves then chances of adoption of insurance are bleak. There is a need for
some subsidisation by government. It can provide information, on weather patterns, locations
of farms and crops, incidence and history of perils and crop yields. It can help to meet the
costs of the research to be undertaken before starting an Rural insurance program. It can also
provide reinsurance.
CHALLENGES

1. Awareness and Education :

There is major challenge for insurance companies and policy makers to increase the
awareness levels among rural population, so that they may view insurance policies as a risk
management tool. Traditionally rural households have addressed their risk protection in
various forms: form the joint family, investing in gold, land and other assets. Most insurance
polices that rural customers are familiar with have been sponsored or subsidized by the
government, the legacy of this past is that rural people do not fully see insurance as a risk
sharing mechanism through contributions in premium. There is need for sufficient investment
by both private and public institutions to bring about a change in the perception of insurance
as a risk mitigation instrument and enhance the awareness levels on various insurance
products and how they work in principle.

2. Documents for certification:

For effecting and servicing various insurance contracts a variety of document are expected to
be provided by the customer to the insurance company. On account of their low awareness
levels and also lack of documentation systems in public institution for issuing various
documents, rural people face a peculiar disadvantage of not processing even some very basic
documents required for taking insurance policies. Below are listed a few such cases

a. Age proofs:
Most rural people do not have a formal age proofs that are demanded by insurance
companies. A common kind of age proof that may be available with good number of people is
the voter identity issued by the government. Unfortunately, the quality 55 of information
captured on these voter IDs is found wanting and therefore is not accepted as a standard age
proof by some insurance companies. If we are to seriously look at extending life insurance on
large scale in rural areas, it will be necessary to provide a standard age proof to all rural
customers which will be accepted by all insurance companies

b. Death certificate:
Currently there is no standardization of how a death certificate is issued uniformly across the
country. Some insurance companies have difficulty in accepting death certificate issued by
other than municipal authorities and revenue departments. For rural people the most feasible
way to get a death certificate is form the gram panchayat. The regulator should clarify to the
industry to give sanctity to the death certificate issued by gram panchayat. Some times the
insurers insist for cause of death, which is possible only if an autopsy is conducted.
c. First Information Report (FIR):
In claims that involve an accident, all insurance companies insist on submission of a fir report
registered with the police. In the rural context the access to a police station is quite remote to
many places and perception and experience of rural people is such that accessing a police
station only invites more hassles to them. In view of this, insurance companies should be
willing to substitute an fir with a declaration from community members in cases where it is
convenient to get an fir.

3. Product customization:
Most products being offered today to rural market are very often urban products, offered to
the rural market with some tweaking in features. Very often this may not be the right way to
go about selling rural products, as the requirements of rural customers can be very different
from that of the urban customer. The product needs specific design in terms of pricing,
premium payment options and simplicity in product features and process requirements.

4. Premium routing :
Customer in rural areas does not have direct access to insurance companies, in order to remit
small premiums amount in cash to the insurer directly. The alternative available for them is
to remit cash to the insurer through banking instruments like cheques or demand drafts. But
this option is unlikely to be helpful to rural customers as very few have bank account to use
these instrument and also the banking infrastructure in rural areas is grossly inadequate.
Therefore there is a need for the regulator and the insurance companies to work on a process,
which allows rural customers to remit premium to insurance companies in a convenient and
cost effective manner. An alternative would be to route the premium through distribution
channels like micro-insurance companies, which have the capacity to handle small, and
multiple cash transactions in villages.

5.Remuneration of expenses for distribution and servicing:

It is well know that cost of delivering micro-finance services is very high. This is a result of
the combination of small and multiple transactions, with the customers scattered over a wider
geography. The current regulations on compensation for insurancever a wider geography. The
current regulations on compensation for insurance distribution have a cap on the
commissions payable, which does not necessarily cover the cost of the selling and servicing
policies in rural areas. There is need to de-regulate the commissions payable on various kinds
of policies, especially for the rural sector. This would allow the insurance companies to
ensure that the transaction costs of selling and servicing of rural insurance policies are
recovered by the distribution partners. This would be absolutely essential to ensure that rural
policies are sold and serviced actively.
6. Moving from willingness to pay approach to willingness to charge
approach:
Traditionally all research and design of rural products has been weighed down by thinking on
what will be minimum premium amount that rural customers will be willing to pay for
various policies. The result of this has been that most products have been designed with very
low premiums that do not adequately cover the actual cost of covering the risk, lease alone
the cost of delivery and servicing of the product. This has only helped to meet in the short
term the regulatory requirement imposed on the insurance companies to do a certain
minimum number of pricing; there is little incentive for either the insurance company or the
distributor to sell these policies in large numbers and do the needful servicing. Therefore
there is a need to design products that are priced in such way that there is enough interest for
customers and also for the insurance companies and distributors to sell the products on a large
scale.

7. Lack of focus on pure risk policies by insurance companies and high

causation of policies in rural areas.
In India, traditionally life insurance business has been seen more as a saving and tax-
reduction instrument rather than as a major risk protection tool. in the rural context it has got
translated into a mere savings instrument, with very little risk coverage. The time bound
contracts in insurance policies are such that, there is every chance of causation of these
policies if the customer cannot pay the premium in a timely manner. This result in, not only
the loss of risk coverage, but the loss of a significant part of the savings made by the
customer. The probability of this happening in rural areas is very high as the incomes of rural
household are unpredictable and varying. This is on account of the agrarian economy of the
rural areas, which is subject to the risks of nature (like inadequate rainfall) quite frequently.
Thus the current life insurance policies, primarily designed for the urban market, are to the
disadvantage of rural market, where the customers stand to loose both their savings and risk
protection. There are reports (the Hindu, 08sep-2004)which indicate that LIC itself has
mopped up about 100 crores in lapsed polices from rural Andhra Pradesh alone in the past
two years. Hence there is need to motivate life insurance companies it sell pure risk products
actively and also make the savings linked products more flexible and fair to rural customers
keeping in view their fluctuating this situation, by ensuring that life insurance companies do a
certain minimum number or percentage of pure risk policies in their overall portfolio.

8.Minimal targets for rural areas:

The current targets set by the regulator for the insurance companies, to meet the rural/social
sector obligation are not representative of the percentage of people residing in rural sector.
Further the target talk about only first 5 years from commencement of the company. As a
result of this, insurance companies have not made sufficient investment in the right direction,
to design and deliver products for the rural market. They have by and large preferred to
exhaust their efforts on rural market by meeting the minimalist targets by the regulator. To see
a greater investment in rural products by insurance companies, it is possibly time for the
regulator to consider a revision in the rural targets for the insurance companies to higher
level.

9.Group approach:
While the group is very much being explored by many insurance companies to offer
insurance services, it very gets restricted to groups where members have taken credit from an
institution. The down side of this arrangement is that those customers who do not have credit
requirements get left of insurance coverage. Therefore there is a need for insurance
companies to design products for groups in rural areas where insurance can offered as a stand
alone service without necessary bundling with credit. This would getting a large size of rural
population under insurance coverage through the simplicity of group products.

10.Health insurance a morphing product

Health insurance product would be more viable to administer for the high impact and low
frequency healthy risk events. These would generally fall under the critical illness category.
While there is an expressed demand by both customers and grass-roots organization in rural
areas to provide insurance coverage for minor or more frequent ailments, it would be more
advisable to meet these smaller costs through savings (self-insurance). It is also well
document that one of the major requirements for credit in rural areas is to meet health
expenses. Thus, it would be useful to design a health risk are addressed by savings and the
other end higher frequency health risk are addressed by saving and the other end of the
spectrum with higher cost and lower frequency health risks can be addressed by insurance.
Some of the health risk in the middle of the spectrum could be addressed by credit possibly.
Thus we will have a health finance product, which morphs from a savings credit to insurance
product based on the scale and frequency of health risk. Of course the delivery of such
product would need the capacities of more than one institution, which have the capacity to
deliver all these services in a complimentary manner.

11. Separate regulation for rural insurance:

Today most of the regulatory activity is directed in general at the whole market, which is still
dominated by the urban and commercial insurance business. Some of these regulatory
directions while addressing the regulatory requirements of the large market may sometimes
actually work to the disadvantage of developing the rural market. Therefore it essential for
the regulator come out with separate regulations, which would propel the development of
insurance services for the rural sector.
 Rural Insurance.ICICI BANK
At ICICI Lombard, investing in rural markets is a part of our social responsibility. The
protection provided to the rural class is specific and customised according to their
requirements. Through a multiple channel system, we not only provide protection for
agricultural assets but also health, motor and other covers.

WHAT IS THE PRADHAN MANTRI FASAL BIMA YOJANA (PMFBY)

The PMFBY was launched in 2016 and replaces all the prevailing yield insurance schemes in
India. The scheme has been launched with an impetus on rural sector. The scheme has
extended coverage under localized risks, post-harvest losses etc. and aims at adoption of
technology for the purpose of yield estimation. Through increased farmer awareness and low
farmer premium rates the scheme aims at increasing the crop insurance penetration in India.

Objective:

Pradhan Mantri Fasal Bima Yojana (PMFBY) aims at supporting sustainable production in
agriculture sector by way of -
a) Providing financial support to farmers suffering crop loss/damage arising out of unforeseen
events
b) Stabilizing the income of farmers to ensure their continuance in farming
c) Encouraging farmers to adopt innovative and modern agricultural practices
d) Ensuring flow of credit to the agriculture sector; which will contribute to food security,
crop diversification and enhancing growth and competitiveness of agriculture sector besides
protecting farmers from production risks.

Eligibility Criteria

Compulsory Component
All farmers availing Seasonal Agricultural Operations (SAO) loans from Financial
Institutions (i.e. loanee farmers) for the notified crop(s) would be covered compulsorily.

Voluntary Component
The Scheme would be optional for the non-loanee farmers.

Coverage of Risks and Exclusions:

Following stages of the crop and risks leading to crop loss are covered under the scheme.

Prevented Sowing/ Planting Risk:

Insured area is prevented from sowing/ planting due to deficit rainfall or adverse seasonal
conditions
 Standing Crop (Sowing to Harvesting):
Comprehensive risk insurance is provided to cover yield losses due to non- preventable risks,
viz. Drought, Dry spells, Flood, Inundation, Pests and Diseases, Landslides, Natural Fire and
Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane and Tornado.

Post-Harvest Losses:
coverage is available only up to a maximum period of two weeks from harvesting for those
crops which are allowed to dry in cut and spread condition in the field after harvesting
against specific perils of cyclone and cyclonic rains and unseasonal rains.

Localized Calamities:
Loss/ damage resulting from occurrence of identified localized risks of hailstorm, landslide,
and Inundation affecting isolated farms in the notified area.

General Exclusions:
Losses arising out of war and nuclear risks, malicious damage and other preventable risks
shall be excluded.

KEY FEATURES OF PMFBY

Low Farmer Premium Rates

The rate of Insurance Charges payable by the farmer will be as per the following table
Maximum Insurance charges
Sr.
Season Crops payable by farmer (% of Sum
No.
Insured)

All food grain and Oilseed crops (all

2.0% of SI or Actuarial rate,
1 Kharif Cereals, Millets, Pulses and Oilseed
whichever is less
crops)

All food grain and Oilseed crops (all

1.5% of SI or Actuarial rate,
2 Rabi Cereals, Millets, Pulses and Oilseed
whichever is less
crops)

Kharif and Annual Commercial / Annual 5% of SI or Actuarial rate,

3
Rabi Horticultural crops whichever is less

Use of Technology

The new scheme envisages many new things such as utilizing innovative technologies like
satellite imagery, vegetation indices etc. coupled with the mandatory usage of smart phones /
hand held devices for increasing the speed and accuracy during yield estimation. In order to
minimize the area discrepancy in coverage, the scheme also promotes the digitization of land
records.
 Increased Farmer Awareness

Efforts are being made to increase the awareness amongst farmers regarding PMFBY so that
maximum number of farmers can enroll and avail benefits of the scheme.

Better Coverage

Pradhan Mantri Fasal Bima Yojana (PMFBY) aims at covering the losses suffered by farmers
due to reduction in crop yield as estimated by the local appropriate government authorities.
The scheme also covers pre sowing losses, post-harvest losses due to cyclonic rains and
losses due to unseasonal rainfall in India. There is a provision to cover losses due to localized
calamities such as inundation also in addition to the previously covered hailstorm and
landslide risks.

WHAT IS RASHTRIYA SWASTHYA BIMA YOJNA (RSBY)?

Rashtriya Swasthya Bima Yojna (RSBY) has been launched by the Ministry of Labour and
Employment, Government of India to provide health insurance coverage for Below Poverty
Line (BPL) families.

Objective:

Provide protection to BPL households from financial liabilities arising out of health shocks
that involve hospitalisation.

Eligibility and Coverage:

Beneficiaries under RSBY are entitled to hospitalisation coverage up to 30,000 for

most of the diseases that require hospitalisation.
Government-fixed package rates for the hospitals for a large number of interventions.
Pre-existing conditions are covered from day one and there is no age limit.
Coverage extends to five members of the family, which includes the head of the
household, spouse and up to three dependents. Beneficiaries need to pay only `30 as
registration fee while central and state government pays the premium to the insurer selected
by the state government on the basis of a competitive bidding.

KEY FEATURES OF RSBY

The Beneficiary
RSBY provides the participating BPL household with the freedom of choice between public
and private hospitals and makes him a potential client worth attracting on account of the
significant revenues that hospitals stand to earn through the scheme.
Business Model for all Stakeholders
The scheme has been designed as a business model for a social sector scheme with incentives
built for each stakeholder.

Insurers
The insurer receives a premium for each household enrolled under RSBY.

Hospitals
A hospital has the incentive to provide treatment to a large number of beneficiaries as it is
paid per beneficiary treated. Even public hospitals have the incentive to treat beneficiaries
under RSBY, as the money from the insurer will flow directly to the concerned public
hospital, which they can use for their own purposes.

Intermediaries
Intermediaries such as NGOs and MFIs have a greater stake in assisting BPL households. The
intermediaries will be paid for the services they render in reaching out to the beneficiaries.
Government
By paying only a maximum sum up to 750 per family per year, the government is able to
provide access to quality healthcare to the BPL population.

Enrollment Process for Beneficiaries

An electronic list of eligible BPL households is provided to the insurer using a pre-specified
data format. An enrolment schedule for each village, along with dates, is prepared with the
help of the district level officials.
As per the schedule, the BPL list is posted in each village at the enrolment station and
prominent places prior to the enrolment and the date and location of the enrolment in the
village is publicised in advance. Mobile enrolment stations are set up at local centres (e.g.,
public schools) at each village. These stations are equipped with the hardware required to
collect biometric information (fingerprints) and photographs of the members of the household
covered, and a printer to print smart cards with photo.
The smart card, along with an information pamphlet describing the scheme and the list of
hospitals, is provided on the spot once the beneficiary has paid the registration fee. The
process normally takes less than ten minutes. The cards are handed over in a plastic cover.
A government officer - Field Key Officer (FKO) needs to be present and must insert his/her
own, government-issued smart card to verify the legitimacy of the enrolment. (In this way,
each enrolee can be tracked to a particular state government official).
In addition to the FKO, an insurance company representative / smart card agency
representative must be present. At the end of the each day of enrolment, the list of households
that have been issued smart cards is sent to the state nodal agency. This list of enrolled
households is maintained centrally and is the basis for financial transfers from the
Government of India to the state governments. This list of enrolled households is maintained
centrally and is the basis for financial transfers from the Government of India to the state
governments.
RSBY has a provision whereby an insurer has to hire intermediaries (e.g. NGOs, MFIs, etc.)
to provide grassroots outreach and assist members in utilising the services after enrolment.
Health Insurance
We provide protection to the health of the rural population through our comprehensive
Family Health Insurance plan...

Tractor Insurance
Tractors are one of the most precious assets for individuals involved in agriculture. Our
comprehensive policy covers not just own damage but also third party damage.

Weather Insurance
Weather Insurance provides cover against losses incurred due to uncertainties in climatic
conditions.