Government has now allowed all the four public sector general insurers to participate in its ambitious farm insurance schemes the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Unified Package Insurance Scheme with potential of over $2.5 billion in premium collection.
The government had kicked off the scheme on June 1 without involving any of the four public sector general insurers, who control almost 50 per cent of the market.
Only 11 private sector players were allowed to participate as they have better experience in crop insurance schemes, an area which state-run companies were almost eschewing so far.
The PMFBY has replaced the existing two crop insurance schemes the National Agricultural Insurance Scheme (NAIS) and the Modified NAIS.
For Kharif crops, the premium charged would be up to 2 per cent of the sum insured, while for Rabi crops, the premium will be up to 1.5 per cent.
We have been allowed to participate in these schemes. Now that Kharif crop season has already begun, we will participate in the Rabi season, the country’s largest general insurer New India Assurance’s Chairman G Srinivasan told PTI.
Its peer National Insurance Company is also gearing up for the scheme.
We are getting ready to participate in the scheme. We are working with Agricultural Insurance Company (AIC) as they are providing us technical knowhow on the subject, its Chairman and Managing Director Sanath Kumar said.
I do believe that it will be a profitable venture as it has been priced on the basis of actuarial calculation which will ensure the insurers get the right price for providing cover, he said.
According to Kumar, the states have already floated tenders for the scheme for Kharif season.
Still, I do believe that we will be able to participate in the forthcoming Rabi crops, he said.
However, a central government official said even for Kharif crops, the state-owned general insurers can provide cover in association with AIC.
The state-run non-life insurers have a massive presence in rural and semi-urban areas compared to their private sector counterparts, which will help increase the reach of PMFBY, he said.
As of now, AIC is the sole state-run company which has been providing the coverage.
Now, all the four state-owned companies will associate with AIC to provide cover under the schemes.
Their participation will also ensure that the scheme benefits both loanee and non-loanee farmers as the premium is quite low.
We have already crossed the mark of 24-25 per cent of coverage of crop loan and now we are aiming at achieving 40 per cent by the fiscal end, he said.
SBI General Insurance is looking at doubling its crop insurance cover during the current fiscal.
We have underwritten premium to the tune of Rs 100 crore in the crop insurance segment in the last fiscal and we are looking at doubling our crop insurance cover during the current fiscal thanks to PMFBY, SBI General Insurance Managing Director Pushan Mahapatra said.
Talking about state-run general insurers joining the bandwagon, he said, More number of players will bring better competition and better risk management practices.
State-run reinsurer GIC Re plans to become the world’s second largest agriculture reinsurer due to its participation in PMFBY.
Our share as reinsurer in PMFBY is already at 30-40 per cent. But we want to make it to above 50 per cent by March so as to become the world’s second largest reinsurer, GIC Re Chairperson Alice G Vaidyan said.