Context:
On 25 July 2025, the Insurance Regulatory and Development Authority of India (IRDAI) released its latest Master Circular. This circular lays out enhanced regulatory obligations for all life, general, and standalone health insurers for FY2025–26 and FY2026–27, superseding the 2024 version of the regulations.
Key Obligations for Insurers
Rural Sector Coverage
- FY26: Insurers must collectively cover lives, dwellings, and vehicles in 25,000 designated Gram Panchayats. Each insurer must ensure 15% coverage in their allocated panchayats.
- FY27: Target increased to 50,000 Gram Panchayats. Insurers must achieve 25% coverage in earlier allocated areas and 10% in newly assigned panchayats.
Social Sector Coverage
- Insurers must ensure that 10% of the total insured lives are from the social sector in FY26, rising to 12% in FY27.
- Where documentation is lacking, up to 20% of beneficiaries may be included based on self-certification.
Motor Third-Party (TP) Insurance
Obligations are based on an insurer’s market share in the TP segment:
| Market Share | FY26 Increase | FY27 Increase |
|---|---|---|
| ≤ 2% | 12.5% | 13.75% |
| 2%–5% | 10% | 11% |
| 5%–10% | 7.5% | 8.25% |
| > 10% | 5% | 5.5% |
Insurers must verify compliance using vehicle registration data and the Insurance Information Bureau (IIB) database to identify uninsured vehicles.
Key Changes Introduced
- A consolidated framework replaces separate regulations for rural, social, and motor TP insurance obligations.
- The definition of rural areas is now tied to Gram Panchayat jurisdiction, promoting better local targeting.
- The social sector definition has been broadened to include:
- Unorganised workers
- Informal sector employees in small establishments (fewer than 10 workers)
- Beneficiaries of government-sponsored schemes
- Emphasis placed on saturation-based coverage: insurers are encouraged to comprehensively cover dwellings, lives, livelihoods, and vehicles in each assigned area.
- Incentives proposed for insurers who exceed minimum targets or adopt innovative approaches.
About IRDAI
- Full Name: Insurance Regulatory and Development Authority of India
- Founded: 1999
- Headquarters: Hyderabad, Telangana
- Current Chairperson: Ajay Seth
