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Saturday, May 15, 2021

Eyeing rural coverage, Irdai pitches for model insurance villages

The idea behind the model village concept is to offer comprehensive insurance protection to all the major insurable risks that villagers are exposed to and make available covers at affordable or subsidised cost.

Written by George Mathew
Mumbai | Updated: May 5, 2021 7:35:28 am
The concept may be implemented in a minimum of 500 villages in districts in the first year and raised to 1,000 in the subsequent 2 years, Irdai said in a paper.

At a time when the Covid pandemic is raging across the country, the Insurance Regulatory and Development Authority of India(Irdai) has come out with the concept of model insurance villages to cover the entire population in those areas, with the financial support of various institutions like Nabard and CSR funds.

The idea behind the model village concept is to offer comprehensive insurance protection to all the major insurable risks that villagers are exposed to and make available covers at affordable or subsidised cost.

The concept may be implemented in a minimum of 500 villages in different districts of the country in the first year and increased to 1,000 villages in the subsequent two years, Irdai said in a paper. The choice of villages is to be made carefully, considering the various relevant aspects and parameters in order to implement the concept successfully for a period of three to five years, it said.

According to the Irdai, in order to demonstrate the concept and efficacy of insurance as risk management tool and to make farmers and rural population aware of benefits of insurance, special focused efforts need to be made to cover the entire population in the village and their property, farms/crops, farm machineries, vehicles, different village level services, manufacturing enterprises and other specific insurance needs of the particular village through targeted efforts in few selected villages. Such model villages are expected to tackle losses due to natural calamities like floods and earthquakes. There’s no catastrophe insurance in the country now.

“Every general insurance company and reinsurance company accepting general insurance business and having office in India (partnering with general insurance company of their choice) needs to be involved for piloting the concept,” it said. The efforts in selected villages need to be continued for a minimum of 3 to 5 years so as to make insurance benefits visible to the community, the Irdai said in a discussion paper on ‘Increasing General Insurance Penetration in rural areas with special focus on agriculture and allied activities’.

In order to make the premium affordable, financial support needs to be explored through Nabard, other institutions, CSR funds, government support and support from re-insurance companies and to keep some of the covers available with very minimum or nominal premium cost. This is to ensure that families and their property, crops get cover and the entire village community participate in the initiative.

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