Private-sector insurer Reliance General has forayed into agriculture insurance business with products giving financial protection from vagaries of weather to crops sown by farmers across the country.
The products include weather as well as yield-based insurance schemes and follow the mandate given in this regard by the Central Government and its agencies to the general insurance unit of Reliance Capital, the financial services arm of Anil Ambani-led Reliance Group.
"It is our first step in the domestic agriculture insurance sector with weather and yield-based crop insurance products, which are aimed at providing protection to farmers from the problems arising due to the vagaries of weather Reliance General Insurance CEO Rakesh Jain told PTI.
"We are confident that agriculture insurance will bring a sigh of relief to farmers who are constantly worried about the changing climatic conditions and their consequent impact on crops," he said.
Reliance General has been empanelled by the Government of India to implement weather-based crop insurance (WBCI) scheme in 21 states. Of these, the company has launched agriculture insurance schemes in five states, after getting approval from the respective state governments.
After being empanelled by the central government, the agriculture insurance provider needs to approach the respective states for launch of its products and services.
Besides, Reliance General has also received mandate under the central government's National Agricultural Insurance Scheme (NAIS) to offer yield-based crop protection to farmers in 50 identified districts across the country.
"The total annual business premium under Weather-Based Crop Insurance Scheme, Modified National Agricultural Insurance Scheme and its predecessor National Agricultural Insurance Scheme is about Rs. 5,000 crore. We are aiming a significant share of the domestic agriculture insurance premium in the next couple of years," Mr Jain said.
The company will provide cover against weather-related risks, which could be excessive rainfall or a shortage in rains, fluctuations in humidity and variations in temperature.
For Kharif crops, rainfall parameter will be covered, while in Rabi season crops, temperature, humidity, rainfall and combination of all three parameters will be covered.
The central government's Modified National Agricultural Insurance Scheme (MNAIS) covers farmers from yield-based risks as well many other risks during the life of a crop.
Both state and central governments subsidize the premiums paid by farmers, while claims are borne by the insurer. The yield-based insurance covers pre-sowing, post-harvest and losses due to natural calamities, pests and diseases.
"The objective of yield-based insurance is to encourage the farmers to adopt progressive farming practices, high value inputs and better technology in agriculture. This will help stabilize farm incomes, particularly in disaster years," Mr Jain said.
Weather insurance schemes facilitate immediate compensation based on objective data obtained from the Indian Meteorological Department. It also gives farmers the flexibility to take up insurance for a particular critical stage of crop growth or for the entire crop cycle.
Reliance General has received a mandate from the central government to implement its WBCI and MNAIS schemes in Andhra Pradesh, Assam, Bihar, Chhattisgarh, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Meghalaya, Odisha, Punjab, Rajasthan, Tamil Nadu, Uttar Pradesh, Uttarakhand and West Bengal.
In the first phase, it has launched its products in Bihar, Haryana, Assam, Uttarakhand and Uttar Pradesh and plans to cover about one lakh farmers in ten states by end of financial year 2013-14.
Earlier, the company successfully launched its weather insurance scheme on a pilot basis in Rajasthan, Chhattisgarh and West Bengal without government subsidy.
It has also set up a dedicated rural call centre to provide farming advisory services, knowledge on insurance products and their benefits, current weather updates and forecasts and market prices of their crops.
The call centre is initially offering services in Hindi language and will later add vernacular languages as well.
"Agriculture-centric insurance could well be the next driver of growth for non-life insurance companies," Mr Jain said.
"Though agriculture is the predominant occupation in India with 25 per cent contribution to the Gross Domestic Product, it is still dependent on unpredictable monsoon."
"Hence, weather-based insurance is well suited to farmers in rainfall-dependent countries like India, as it would mitigate risk in agriculture, protect farmers against financial losses due to adverse weather conditions and further improve the livelihood of 70 per cent Indians," he added.
NDTV Profit, Sunday, Aug 18, 2013