Crop insurance drives non-life business
MUMBAI: Crop insurance has helped the non-life industry record 32% growth the last fiscal and cross the Rs 1-lakh-crore mark for the first time. From nowhere, crop insurance has emerged the third largest line of business after motor insurance and health insurance following the launch of the Pradhan Mantri Fasal Bima Yojana (PMFBY) last year.
Business figures for nonlife insurance companies released by the Insurance Regulatory and Development Authority of India (IRDAI) for the year 2016-17 show that total premium income jumped to Rs 1.27 lakh crore from Rs 96,376 crore in FY16. Usually, the growth in the non-life segment reflects the growth in the real economy, new investments and sale of automobiles. This year, the industry has managed to re cord its highest growth since liberalisation, despite absence of any new projects, due to the opening up of crop insurance.
“Of the 32% growth, nearly 16% came from crop insurance," said G Srinivasan, chairman, New India Assurance, the country's largest insurer. He added that business would be good for the topline as well as crop loss claims were expected to be around 75% of the premium. While the year has been good for farmers, Karnataka and Tamil Nadu saw crop damage due to drought. Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance, the largest private insurer, said, “For us, crop insurance is almost 10% of total premium and it's the third biggest line of business."
This is the first year that there is a completely marketdriven crop insurance scheme. The earlier National Agriculture Insurance Scheme (NAIS) was primarily a government programme and administered by the Agriculture Insurance Corporation of India. Under the PMFBY, insurers quote market rates. However, the farmer pays only 2 percentage points of the sum insured as premium and the rest is subsidised by the government.
Dasgupta said, “We have gone in for reinsurance as the severity of claims can be extremely high and loss ratios (ratio of claims to premium) can go up to 200%.“ He said that next year the premium from crop insurance would be higher as the penetration is set to increase from present level of 28%. The value of the total crop insured during the current financial year would be in the region of Rs 3 lakh crore.
Besides providing cover, non-life companies aim to reduce losses by roping in weather companies and providing advice to farmers on the risks involved. According to figures released by the insurance regulator, the four public sector non-life companies -New India Assurance, National Insurance, Oriental Insurance and United India Insurance -continue to retain the top slots. However, they have grown slower than the industry at 24% and marginally lost market share.
Business figures for nonlife insurance companies released by the Insurance Regulatory and Development Authority of India (IRDAI) for the year 2016-17 show that total premium income jumped to Rs 1.27 lakh crore from Rs 96,376 crore in FY16. Usually, the growth in the non-life segment reflects the growth in the real economy, new investments and sale of automobiles. This year, the industry has managed to re cord its highest growth since liberalisation, despite absence of any new projects, due to the opening up of crop insurance.
“Of the 32% growth, nearly 16% came from crop insurance," said G Srinivasan, chairman, New India Assurance, the country's largest insurer. He added that business would be good for the topline as well as crop loss claims were expected to be around 75% of the premium. While the year has been good for farmers, Karnataka and Tamil Nadu saw crop damage due to drought. Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance, the largest private insurer, said, “For us, crop insurance is almost 10% of total premium and it's the third biggest line of business."
This is the first year that there is a completely marketdriven crop insurance scheme. The earlier National Agriculture Insurance Scheme (NAIS) was primarily a government programme and administered by the Agriculture Insurance Corporation of India. Under the PMFBY, insurers quote market rates. However, the farmer pays only 2 percentage points of the sum insured as premium and the rest is subsidised by the government.
Dasgupta said, “We have gone in for reinsurance as the severity of claims can be extremely high and loss ratios (ratio of claims to premium) can go up to 200%.“ He said that next year the premium from crop insurance would be higher as the penetration is set to increase from present level of 28%. The value of the total crop insured during the current financial year would be in the region of Rs 3 lakh crore.
Besides providing cover, non-life companies aim to reduce losses by roping in weather companies and providing advice to farmers on the risks involved. According to figures released by the insurance regulator, the four public sector non-life companies -New India Assurance, National Insurance, Oriental Insurance and United India Insurance -continue to retain the top slots. However, they have grown slower than the industry at 24% and marginally lost market share.
