Page 9 - The Insurance Times June 2025

Telangana Rejoins PMFBY, Insurers Ready for Covid Claims Amid Mild Case
Resumes Crop Insurance Surge

from Kharif Season General insurance companies in India are better equipped to handle claims
After a five-year hiatus, Telangana will if there is a resurgence of Covid-19 infections, say industry leaders, amid
rejoin the Pradhan Mantri Fasal Bima reports of rising mild cases across the country. Currently, over 250 active
Yojana (PMFBY) and resume crop insur- cases have been reported, though hospitalisation remains stable.
ance for farmers from the upcoming Parthanil Ghosh, Executive Director at HDFC ERGO General Insurance,
kharif season. The State had exited the noted, "We as an insurance company are fully prepared to support our
scheme in 2020 but has now commit- policyholders in processing of claims," recalling the lessons learned during
ted to reviving it to shield farmers the 2020 pandemic wave. While there is no significant uptick in hospital
from weather-related crop losses. admissions, insurers are considering setting aside provisions in case a surge
Under the reintroduced scheme, farm- occurs later this quarter.
ers will pay a 2% premium for kharif Southeast Asian countries have already seen a spike in mild infections. In-
crops and 1.5% for rabi crops. For com- surers are monitoring the situation closely, especially with other viral illnesses
mercial crops, the farmer's contribu- rising due to unseasonal rains. The industry is determined to respond swiftly
tion will be around 5%, with the re- if the public health situation worsens.
maining cost shared by the State and
Centre. The State will be divided into
11 clusters for improved crop loss as- sion, currently fixed at 4% for FY25. As vival issue for most companies if it is
sessment. of December 31, 2024, obligatory ces- not re-looked into," she said.

Agriculture Minister Thummala sion accounted for 39% of GIC Re's The industry has not seen a revision in
Nageswara Rao said the scheme will domestic business. The insurers are TP premiums for several years despite
cover nearly 98% of the gross cropped seeking relief amid underwriting losses, surging court-awarded compensation
area and benefit farmers cultivating particularly in motor TP insurance, and medical costs. A recent meeting
paddy, cotton, maize, pulses, and hor- where revised premiums have yet to between insurers and the Department
ticultural crops. The government also be notified for FY25-26, creating uncer- of Financial Services (DFS) addressed
plans to deploy technology for swift tainty in pricing and solvency projec- the issue. The TP rates are set by the
yield assessment and facilitate faster tions. Ministry of Road Transport and High-
claims settlement. The industry hopes the meeting will ways in consultation with IRDAI.
pave the way for reforms aimed at Insurers are urging the government to
Insurers to Meet DFS Sec- easing capital stress and enhancing expedite the rate hike to protect the

retary for Motor TP Rate, operational efficiencies. sector's financial health.
Cession Concerns Motor TP Rate Hike Cru- TP Premium Freeze Ham-
Non-life insurers will meet Department cial for Insurers' Survival: pers Insurer Viability, Cov-
of Financial Services (DFS) Secretary M
Nagaraju on May 7 to discuss pressing New India CMD erage Remains Low
industry concerns, including delays in New India Assurance CMD Girija With just 52% of Indian vehicles in-
revising motor third-party (TP) insur- Subramanian has warned that a hike sured, New India Assurance CMD Girija
ance premiums and reducing obliga- in motor third-party (TP) premiums is Subramanian highlighted the urgent
tory cession to GIC Re. The meeting is critical for the survival of general insur- need to revise motor third-party (TP)
expected to cover sectoral growth ers. Speaking during an analyst call, she premiums to ensure industry
trends, claims settlement experiences, noted that TP insurance is mandated sustainability. Despite mandatory TP
and progress on hospital empanelment by law, leaving insurers with no flexibil- cover for new vehicles, enforcement
initiatives under the General Insurance ity but to absorb rising costs. gaps persist, especially as TP rates have
Council. "We cannot have a strategy around it… not been updated in five to six years.
Insurers have been urging a downward The TP premium hike is surely the need The freeze comes amid inflation-driven
revision in obligatory reinsurance ces- of the hour and it will become a sur- increases in court-awarded compensa-

The Insurance Times June 2025 9