Page 6 - Insurance Times August 2020

the insurance claim settlement has al- Minister Vijay Rupani said the State be provided in the event of crop dam-
ready started. While the cost of the government was forced to scrap the age in the 33-60 per cent range, while
Boeing 737 ranges from $90 million to tenders after insurance companies Rs. 25,000 per hectare for damage in
$134 million, the insured value of the asked for exorbitantly high premiums. excess of 60 per cent. The relief
ill-fated 737 Air India Express plane "The cost of premium worked out to amount will be directly credited to
would be around half of the original about Rs. 4,500 crore, which is exorbi- farmers' accounts through direct ben-
cost or even less than that - or $ 45-55 efit transfer (DBT).
tant. Though PMFBY is a good scheme
million - after considering the depre-
for farmers and Gujarat had been part
ciation, insurance sources said. of it, and would want to be so in fu- India's insurance penetra-
"Reinsurers will consider the claim af- ture too, for the current year at least,
ter taking into account all the details tion well below global av-
we are not going with PMFBY, consid-
relating to the accident," they said. ering the excess burden on the State erage, says IRDAI Chairman
Air India is purely a reinsurance-driven exchequer," Rupani said. India’s insurance penetration is well
account and almost over 95 per cent Last year, Reliance General Insurance below the global average and insurers
of the cover is reinsured in the London should expand beyond bigger cities to
Company, Universal Sompo, Bharti Axa
market. GIC gets the mandatory 5 per and Agriculture Insurance Company of address this issue, said Subhash
cent of the reinsurance as per the gov- India ran the scheme in the State. Chandra Khuntia, chairman of the In-
ernment regulations. GIC has not yet surance Regulatory and Development
With one State after another quitting
divulged its share in the Air India insur- Authority of India (IRDAI).
the PMFBY, questions are being raised
ance deal. “The total premium that we collect is only
about the effectiveness and the suc-
Air India's insurance renewal cost had cess of the scheme. Besides Gujarat 3.76% of GDP (gross domestic product).
almost doubled to around $28 million The world average insurance penetration
and Bihar, West Bengal has exited the
for the year 2018-19 as a host of ad- is a little higher than 7%,” Khuntia said ,
scheme; while Punjab did not imple-
verse factors including the crash of an ment it at all. while addressing a conference hosted by
Ethiopian Airlines aircraft put an end the Federation of Indian Chambers of
to the days of discounts in the seg- Chief Minister Rupani, instead, Commerce and Industry.
launched an alternative State-funded
ment. Air India has reportedly paid To improve this figure, Khuntia urged
scheme - Mukhya Mantri Kisan Sahay
over $30 million premium in 2020. insurers to design micro insurance
Yojana - covering all farmers under
"Aviation insurance is a global product crop insurance with zero premium. products to cater to rural and tier two,
and the trend on product and pre- three and four cities, anticipating de-
"This is a much simplified scheme re-
mium is mostly controlled by global quiring no registration by farmers. Cli- mand as Covid-19 spreads through the
reinsurance majors. Since, the trend matic extremities such as drought, hinterland.
over the last five years after the Ma-
floods or even unseasonal rains will be The IRDAI also suggested that insurers
laysian airlines crash in 2014 has been considered for claims. consider job and income loss policies
largely stable, the Kozhikode incident and focus on group insurance policies
Under the PMFBY, 15-17 lakh farmers
is unlikely to lead to a spike in premi- for small and medium enterprises
were covered, whereas now all 56 lakh
ums," said a senior official with a gen- keeping in mind the migrant workers
farmers - big and small - will automati-
eral insurance company. who would be returning to work.
cally be covered," Rupani said. The
Gujarat, exits PM crop in- scheme will be rolled out with an out- “These opportunities we are losing
lay of Rs. 1,700-1,800 crore for the because we are too conservative,” said
surance scheme kharif 2020 season. Khuntia.

Gujarat has exited the PM Crop Under the new scheme, any farmer About 1.5 million lives had been in-
Scheme due to heavy premiums with up to four hectares of land will be sured within a month under the two
charged by companies for the crop in- eligible to claims according to the Covid-19 specific insurance policies,
surance plan. guidelines, which will soon be notified. Corona Kavach and Corona Rakshak,
Announcing the exit, Gujarat Chief A relief of Rs. 20,000 per hectare will according to Khuntia.

6 The Insurance Times, August 2020