IRDAI mandates insurers to cover 75,000 gram panchayats

• 28 Jul 2025
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The Insurance Regulatory and Development Authority of India (IRDAI) has instructed insurance companies to provide coverage for 75,000 gram panchayats over the next two years as part of their rural, social sector and motor third party obligations.

This requirement is applicable to all life, general, and health insurers, including stand-alone health insurance companies. In the current financial year 2025-26, each insurer must cover 25,000 villages across India. In the following financial year, this number will be increased to 50,000 panchayats that insurers need to bring under coverage.

In a gram panchayat, the minimum percentage of lives (or health cover, vehicles or assets for non-life) to be insured is 15% for all life, general and stand-alone health insurers for the present financial year.

For the financial year 2026-27, this percentage will increase to 25% for gram panchayats allocated in FY26, and it will be set at 10% for newly added gram panchayats during that year, as stated by the IRDAI in its Master Circular on Rural, Social Sector and Motor Third Party Obligations 2025.

Both the Life Insurance Council and the General Insurance Council will identify specific parameters like market share or any other relevant criteria for the purpose of determining the minimum number of gram panchayats that should be assigned to each insurer. The councils will also establish the minimum number of gram panchayats to be allotted on an insurer by insurer basis.

To maintain the up to date list of respective administrative units, the local government directory of the ministry of panchayati raj will be used. Using this directory, the councils can secure district - village panchayat - village - pincode mapping and share the same with all the insurers for identifying rural sector business at the underwriting level.

The guidelines for rural, social and motor third party insurance were introduced by the insurance industry regulator in 2024. These guidelines require life, general and stand-alone insurers to follow the standards set by the Life and General Insurance Council for the financial year 2024-25, including the allocation of the number of gram panchayats. 

However, the applicability of the norms issued in 2024 expired at the end of FY25. For FY 26 and FY 27, new norms, which include specific numbers of panchayats to be covered and a minimum percentage of insurance coverage, must be adhered to by all insurers in the country. According to government data, there are 268,000 village panchayats at present.

Source: Businessline