Summary (English)

While opening, in 1999, the insurance market to private players, the Insurance Regulatory and Development Authority (IRDA) in India, issued new regulations aiming to enroll all insurance companies in the government's efforts to extend social protection services to the disadvantaged groups of the population. A stipulated part of their portfolio had to be devoted to activities answering the particular insurance needs of the "rural" and "social" sectors. This new overall strategy relied on two cross-subsidy mechanisms applying respectively to public or private insurance companies.

• Public insurance companies, while dealing with the poor, may have access to direct subsidies, allowing them to sell some products aimed at the poor, at very low prices. The subsidy mechanisms already available currently cover such risks as: life (trough the Life Insurance Corporation), health care (through the four general insurance companies), crops and seeds (through the agricultural insurance company).
• Private insurance companies, which have to comply (on penalty of fines) to the new regulations spelling out specific targets to be reached in a 5-year time span, while selling their products to the poor, are forced to use an internal cross-subsidy mechanism, whereby the costs of servicing the poor are partly covered by their mainstream insurance activities.