PMFBY pushes AICI’s an­nual growth to 15%

Main­tains 32% mar­ket share:

Banking Frontiers - - Crop Insurance - Me­hul@bank­ingfron­tiers.com

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.

IN­NO­VA­TIVE PROD­UCTS

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.

MON­SOON IM­PACT

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.”

CHAN­NEL PART­NERS

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.

EX­PAN­SION PLANS

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

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