Page 38 - Insurance Times September 2021

In any such tenders, all the
empanelled companies of private
and public sector will also be
eligible to participate. It is yet to
be seen how the state level
insurance companies will compete
with Agriculture Insurance
Company (AIC) and other private
companies which have long
experience of running crop
insurance. Over 65% of about Rs
14,000 crore of claims have been
paid to 1.08 crore farmers, bulk of
it after the Covid-19 lockdown:

Andhra Pradesh has decided to set
up its own crop insurance company
and it has applied to Insurance
Regulatory and Development
Authority for a licence. No
premium is charged from farmers.
So far, the scheme is being
operated by the state government
and there is no participation of
insurance companies. As a result,
the state government will be
responsible for payment of any
claims. Andhra Pradesh, Telangana
and Jharkhand wrote early this year to the Centre,
communicating their decisions to exit the scheme. Insurer's dilemma:
One of the major criticisms of PMFBY in the media and
Now, Gujarat and Madhya Pradesh seem to follow suit. public discourse was that it has resulted in undue enrichment
While Punjab never implemented the PMFBY, Bihar and West of private insurance companies. In 2019-20, out of Rs.
Bengal have their own crop insurance schemes under which 31,391 crore of gross premiums of all the insurance
farmers do not pay any premium. Haryana is also said to be companies, PSU companies collected Rs 16,325 crore (52%).
exploring if it can form its own insurance company. For kharif AIC alone collected GP of Rs 13,651 crore (43.5%). But the
2020, however, it has gone in for PMFBY. However, the fact is ICICI Lombard, Cholamandalam MS, Shriram General
claims ratio of the last kharif season is unlikely to go up to Insurance and Tata AIG have opted out of PMFBY from kharif
the 2018-level. In the states which have set up their own 2019-20, as they felt that the claim ratios in previous
insurance companies, premium subsidy from the Centre will seasons were too high.
be available only if actuarial premium rates are discovered
through a transparent process of tendering. The government's own Public Sector Undertakings (PSUs) -
General Insurance Corporation, United India Insurance
Company, National Insurance Company, Oriental Insurance
Company and New India Assurance have also faced
difficulties in getting reinsurance due to their losses and high
claim ratio in previous seasons. As a result, only 10 out of
18 empanelled insurance companies were eligible to
participate in crop insurance in the kharif 2020 season.
PMFBY completed five years when rabi crops were
harvested in March-April 2021. In 2019-20, the Centre and

38 The Insurance Times, September 2021