“We are deliberating on creating a risk pool for claim settlement. Under the proposed pool, insurance companies will keep 20% of the premium and hive off the rest to the pool. The pool will be managed by an insurance company, preferably LIC,” said an official, who did not wish to be identified.
He said the primary insurer may be agriculture ministry, chipping in with Rs 2,000 crore as capital investment and bank guarantee of Rs 5,000 crore in the Rs 30,000 corpus. The remaining amount will be shared between participating insurance companies and state government governments.
The need for the pool has come up as the insurance premium this year has gone up almost 50% compared with the average of the past four years.
“The average premium in this kharif season has been 18%, as against 12% in last four years since launch of insurance scheme in 2016. This is because out of the 18 insurance companies only nine participated in the bid this year, making it less competitive,” said the official.
The official said five private insurance companies – ICICI Lombard, Tata AIG, Cholamandalam MS, Royal Sundaram and Shriram General Insurance – had opted out of crop insurance business while four public sector insurance companies – New India Assurance, United India Insurance, National Insurance and Oriental Insurance – ran out of contention owing to higher bids.
“Now they have given their consent to participate after we had sent them notice for de-empanelment,” said the official.
He said the claim ratio – claim paid against the premium collected – for kharif 2019-20 was 80.6%, lower than the average claim ratio of 86.6% distributed in 2016-17, 2017-18 and 2018-19.
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1 Comment on this Story
Am Pm59 days ago
Another failure by FEKUJI.