PMFBY pushes AICI’s annual growth to 15%
Maintains 32% market share:
The Agriculture Insurance Company of India (AICI), a public sector body, accounts for almost one-third of the country’s crop insurance business. During 2016-17, gross premium underwritten by general insurance companies shot up by 32% to `1272 billion, mainly driven by the crop insurance segment, which has become the third largest business after motor insurance and healthcare in India. The Pradhan Mantri Fasal Bima Yojna (PMFBY) scheme is implemented by 18 insurance companies on competitive basis. And India is now the third largest agriculture insurance market globally.
The major schemes implemented in India so far are Comprehensive Crop Insurance Scheme (CCIS), 1985, National Agricultural Insurance Scheme (NAIS) 1999 and National Crop Insurance Program (NCIP), 2013 with 3 components - Modified National Agricultural Insurance Scheme (MNAIS), Weather Based Crop Insurance Scheme (WBCIS) and Coconut Palm Insurance Scheme (CPIS). Besides PMFBY 2016, there is a modified version of WBCIS along with CPIS.
T.L. Alamelu, chairman-cummanaging director, AICI says apart from the government crop insurance schemes, AICI has developed a bouquet of innovative, farmer-friendly products, tailor-made for specific crops and risks viz, Bio-Fuel Tree/ Plant Insurance, Pulpwood Tree Insurance Policy, Rubber Plantation Insurance, Coconut Palm Insurance, Cardamom Plant & Yield Insurance, Potato Crop Insurance, Mango Insurance, Rainfall Insurance Scheme for Coffee, Draksha Bima Yojna (Grape Insurance), Varsha Bima and Rabi Weather Insurance. She adds that the number of farmers covered under PMFBY is around 50 million as against 35 million covered under earlier schemes.
KHARIF, RABI PREMIUM UP
The crop insurance coverage and premium have gone up notably after introduction of PMFBY from kharif 2016 season. AICI was able to maintain the leadership with 32% market share in 2016-17. During kharif 2016 and rabi 2016-17, the company implemented PMFBY in 228 districts and 222 districts respectively. It could create a well-diversified portfolio.
Kharif premium during 2017-18 rose to `190 billion from `170 billion a year ago. Similarly, during rabi 2017-18, premium rose to `60 billion from `55 billion a year ago. “The GDP (gross domestic premium) of AICI rose to `78.93 billion during 201718 from `69.82 billion during 2016-17. Pan India, the total GDP under crop insurance is around `250 billion during 2017-18 against `225 billion during 2016-17,” says Alamelu.
TOP STATES IN PREMIUM
Most of the food crops and oilseeds are covered under PMFBY. Apple, mango and other fruits and vegetables are generally covered under WBCIS.
Alamelu says the top states in term of premium are Maharashtra, Madhya Pradesh, Gujrat and Karnataka and the major claims during 2017-18 were in Madhya Pradesh, Maharashtra, Chhattisgarh and Odisha. The major crops covered are paddy, wheat, groundnut, soybean and cotton.
More than 55% of India’s cultivable area remains rain-fed. A good monsoon helps increase soil moisture and thus better rabi yields in rain-fed areas. Explains Alamelu: “Bad monsoon results in claims. Even excess rain during kharif has negative impact on the claim pay-outs. A weather derivative can be a supplement for existing crop insurance program, particularly for crops not covered due to non-availability of yield data. However, for this we need a dense network of tamper proof weather stations.”
At present, AICI’s business primarily comes through financial institutions providing seasonal agriculture operations loans. The company has empanelled more than 80 brokers and some 10 micro-insurance agents. “Farmers willing to participate in crop insurance schemes of the government may also join through a large network of around 3 lakhs Common Service Centers spread all over India both in rural and urban areas,” says Alamelu, adding: “The number of borrower farmers covered is around 70% of total farmers covered and the balance is non-borrower farmers.”
TECHNOLOGY FOR SETTLEMENT
The timely release of subsidy amount by government will speed up claim settlement process, says Alamelu and the use of technology like Remote Sensing Technology (RST), drones, Mobile App for Crop Cutting Experiments (CCEs) will help in faster settlement of claims.
AICI is making good progress by recording annual growth of about 15% and retaining its position as market leader. Alamelu indicates that the company is aiming to cover more number of farmers by increasing the reach in rural areas.
T.L. Alamelu reveals that the number of farmers covered under PMFBY is around 50 million as against 35 million covered under earlier schemes