The Hindu Business Line : More farmers seeking cover against shortfall in rain

Agriculture Insurance Company of India Ltd (AIC) hopes to cover over two lakh farmers under "Varsha Bima-2005", its new insurance scheme against low rainfall. " The response to the scheme has been good from Maharashtra, Uttar Pradesh, Madhya Pradesh and Andra Pradesh and Karnataka" said Mr K.N. Rao, Manager, AIC, said of Varsha Bima-2005, launched on June 2.

The insurees under the scheme are expected to be largely the farmers of Maharashtra, said Mr Rao.

According him, many institutional agencies such as co-operative banks, micro-financing agencies and self-help groups are promoting the scheme.

The scheme is being implemented in 140 India Meteorological Department Rain Gauge areas spread across 10 States. AIC has also designed an exclusive rainfall insurance product for Rajasthan, "Sookha Sooraksha Kavach".

According to Mr Rao, as opposed to traditional crop insurance, `Varsha Bima' allows for the speedy settlement of claims along with flexible premium and compensation structure. Besides, this is open to all farmers, regardless of their having bank loans.

The two - year-old insurance company set up exclusively for providing crop insurance, AIC has insured 18 million farmers under various scheme, up by 50 per cent over 12 million in 2002-03.

Earlier this year, AIC launched the `Coffee Rainfall Index and Area Yield Insurance (CRIAY)' in areas of Assam, and Karnataka's Chikmagalur and Kodagu.

AIC also proposes to come out with scientifically designed crop insurance products. Research is underway for a tea insurance product based on IMD data, soil type and satellite images that convey the leaf area index. A specialised cover is also being designed for the poppy plant cultivated in Rajasthan, Madhya Pradesh and Uttar Pradesh under the supervision of the Narcotics Control Bureau, as also aromatic and medicinal plants, said Mr Rao.

According to analysts, traditional crop insurance has not been successful as it involves high claim payouts and cost of collection. Besides, it can take months for compensation to be paid out as it has to be determined on yield data.

Among private insurers, ICICI Lombard was the first general insurance company to introduce weather insurance. The company has introduced insurance covers for cotton, orange, coriander, grapes and cotton crops in Maharashtra, Andhra Pradesh, Tamil Nadu, Karnataka, Rajasthan and Madhya Pradesh. It has covered 1,00,000 farmers.

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