Page 8 - Insurance Times December 2021

While the industry grew overall, pub- with a total sum insured amount of Rs on material damage has been paid or
lic sector companies United India Insur- 1,93,767 crore during 2020-21. liability for the asset has been granted.
ance Company Ltd, National Insurance
However, total claims reported were As a result, profit loss insurance (also
Company Ltd, ECGC Ltd and private
of Rs 9,570 crore for 2020-21. Out of known as business interruption insur-
sector players NAVI General Insurance
which, claims reported from the ance or consequential loss insurance)
Ltd and Shriram General Insurance Kharif season were Rs 6,779 crore, is usually sold with fire insurance or
Company Ltd logged negative growth. while from Rabi season Rs 2,792 crore. machine failure insurance.
Within the industry, all the five "The claims at Rs 9,570 crore for 2020- According to the company, "IRDAI
standalone health insurers had a posi- 21 were significantly lower as there launched a regulatory sandbox under
tive business growth last month and were no major losses unlike previous the IRDAI (Regulatory Sandbox) regula-
they had earned Rs 1,609.37 crore as year," an Agriculture Ministry official tion on July 26, 2019. Shriram General
premium. told PTI. is under the second cohort. I applied for
Last month the two specialised insur- Maximum crop insurance claims were the product at. Application from Sep-
ers -- Agricultural Insurance Company reported from Rajasthan at Rs 3,602 tember 15, 2020 to October 14, 2020."
of India Ltd and ECGC Ltd -- earned a crore, followed by Maharashtra at Rs Shriram General Insurance said in a
premium of Rs 338.57 crore and Rs 1,232 crore and Haryana at Rs 1,112.8 statement that it received regulatory
80.38 crore respectively. crore during 2020-21. During the 2019- sandbox approval for FLOP's six-month
20 crop year, about 501 lakh hectare
was insured by 613 lakh farmers under test ground for new business models,
Crop Insurance Claims at the PMFBY with a total sum of Rs processes, and applications. The insur-
Rs 9,570 Cr for 2020-21 2,19,226 crore. The claims reported ance industry needs a sandbox ap-
proach to provide more convenient
Lower by Over 60% from from Kharif season remained higher at processes and protection for policy-
Rs 21,496 crore, while from Rabi sea-
Previous Year son at Rs 5,902 crore of the 2019-20 holders. The current approval is for 6
months from November 15th, but the
There has been more than 60 per cent crop year. extension may be based on achieving
decline in the crop insurance claims of
farmers at Rs 9,570 crore under the Shriram General's Fire Loss the goal.
Pradhan Mantri Fasal Bima Yojana of Profit insurance gets How is insurance different from
(PMFBY) for the 2020-21 crop year fire insurance?
from the previous year as there were sandbox nod Fire insurance aims to cover asset risks
no major crop losses, according to of- Shriram General Insurance fire Loss of such as buildings, plants, machinery,
ficial data. profit product has got sandbox nod. furniture, fixtures, accessories and in-
This product covers the loss of gross
However, much of the crop insurance profit or income and / or the increase ventories in multiple locations, in some
claims reported for 2020-21 and 2019- cases. This is also known as the prop-
in working costs due to the decrease
20 crop years have been cleared by the erty damage policy. FLOP policies help
in sales / production of the business
government. Crop insurance claims protect the insured from loss of in-
caused by the covered danger.
stood at Rs 27,398 crore in the 2019- come, while fixed or fixed costs can
20 crop year (July-June). Under the offer, liability is held under help reduce working costs in the event
the profit loss policy in the event of of a fire.
PMFBY was launched in 2016-17 with such loss due to the risks mentioned,
many improvements over the erstwhile without enforcing a material damages Currently, no insurance company offers
crop insurance schemes. The opera- policy. FLOP covers on a stand-alone basis.
tional guidelines of the scheme were Current practice is that liability under
revised with effect from Rabi 2018 and Traditionally in India, the policy on loss FLOP is only granted if the policy on
kharif 2020, respectively, to ensure the of profits from fire (FLOP) is conditioned material damage is in effect and recog-
benefits reached farmers adequate and on the policy on property damage (fire). nizes liability for the insured's assets.
timely. According to the data, about 445 This means that liability under FLOP will The insurer said in a statement that our
lakh hectares of farm land was insured only be granted if the policy on mate- offer would accept liability without en-
by 612 lakh farmers under the PMFBY rial damage is in effect and the policy forcing a material damages policy. T

8 The Insurance Times, December 2021