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CS Professional · Banking and Insurance - Laws and Practice · Concept of Insurance

Bharat General Insurance Ltd. has a rural-sector obligation specified by the Authority. It designs a crop-linked product for farmers and a micro-policy for informal-sector workers, but argues that crop insurance is not required because the obligations cover only life products. Which reading of section 32C is correct?

Under section 32C, insurers discharge their rural and social obligations by offering life or general policies to rural residents, unorganised or informal workers and economically vulnerable or backward classes, and these policies shall include crop insurance. The life-only argument is therefore wrong.

  1. AObligations extend to life insurance only; crop insurance is voluntary
  2. BObligations cover persons in the rural sector, unorganised or informal workers, and economically vulnerable or backward classes, and the policies shall include insurance for cropsCorrect
  3. CObligations apply only to public sector insurers and exclude crop insurance
  4. DCrop insurance is required only if the Central Government notifies it each year

Explanation

Section 32C says insurers discharge the section 32B obligations by providing life or general policies to rural persons, informal sector workers and vulnerable or backward classes, and that the policies shall include insurance for crops. Hence crop insurance is part of the obligation and the life-only argument fails.

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