Financial Daily from THE HINDU group of publications
Thursday, Sep 15, 2005
Financial Daily from THE HINDU group of publications Thursday, Sep 15, 2005 |
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Agriculture Agri-Biz & Commodities - General Insurance Money & Banking - Regulatory Bodies & Rulings IRDA moots stand-alone agri-insurance companies Radhika Menon
Mumbai , Sept. 14 THE Insurance Regulatory and Development Authority (IRDA) has suggested setting up of standalone agriculture insurance companies with reduced capital requirements of Rs 25-40 crore. Currently, the minimum capital requirement for life and general insurance companies is Rs 100 crore. A lower capital requirement would encourage more players to explore the insurance market. A similar recommendation for reduced capital requirements has been made with respect to health insurance companies. Two years back, the Government had created the Agriculture Insurance Company of India to promote the insurance of agriculture. Private companies such as ICICI Lombard and Iffco Tokio are offering insurance products to farmers. According to analysts, stand-alone agriculture insurance companies with reduced capital requirements would interest cooperatives to come forward. The move stand-alone agriculture insurance companies has gained further momentum with the World Bank's commitment to promote agriculture insurance in India. The World Bank has invited bids from research bodies worldwide between September 9 and October 9 for initiating a study of agriculture insurance in India. Many international insurance companies set up subsidiaries for research, and these entities may double up as bidders. Dr K. C. Mishra, Director, National Insurance Academy, said the project would be a "capacity creation study" where the selected research body with expertise in agriculture insurance would partner a research body in India. While the international company will bring the technology and know-how, the research body in India will provide data and local analysis. In India, the National Insurance Academy has been helping the Agriculture Insurance Company to design their products. Dr Mishra said that the US has several insurance companies covering agriculture, and Japan and the Philippines also have robust agriculture insurance programmes. Mr Ajit Narain, MD and CEO, Iffco Tokio General Insurance Company, said that the concept of a stand-alone agriculture insurance company would be viable if there are adequate data and technology to support it. "If the World Bank initiates a study and there are sufficient data and statistics, then existing insurance companies would be interested in expanding their portfolio of products covering agriculture," he added. Iffco Tokio has covered 16,020 farmers in eight States under the Barish Bima Yojana, an insurance cover against deficit rainfall. It also provides personal accident covers on the purchase of fertilisers where the upper limit of the sum assured is fixed at Rs 1,00,000. Agriculture Insurance Company has covered 18 million farmers in 2004-05.
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