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CS Professional · Banking and Insurance - Laws and Practice · Regulatory Framework in Insurance

Bharat General Insurance Ltd offers motor and fire policies in metros and plans to extend cover to small farmers. Which statement correctly reflects its obligations under the Insurance Act, 1938 on rural, unorganised and backward-class segments?

Every insurer must provide life or general insurance policies to rural residents, unorganised or informal sector workers, and economically vulnerable or backward classes, plus other categories specified by regulations. The policies must also include crop insurance, so the duty is neither voluntary nor limited to rural residents.

  1. APolicies for these segments are voluntary, but crop insurance is mandatory only for public sector insurers
  2. BIt must provide policies to rural residents, unorganised sector workers and economically vulnerable or backward classes, and such policies shall include insurance for cropsCorrect
  3. CCrop insurance is excluded from the obligation and left to the Central Government alone
  4. DThe obligation covers only persons residing in rural areas and no other category

Explanation

Section 32C requires every insurer to discharge the section 32B obligations by providing policies to rural residents, unorganised or informal sector workers, economically vulnerable or backward classes and other categories specified by the Authority's regulations. It states that such policies shall include insurance for crops. The other options narrow or exclude parts of this.

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