Financial Daily from THE HINDU group of publications
Thursday, Feb 23, 2006
Financial Daily from THE HINDU group of publications Thursday, Feb 23, 2006 |
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Money & Banking
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General Insurance Agri-Biz & Commodities - Poultry Industry & Economy - Economy Poultry insurance covers bird flu losses, clarify officials
Radhika Menon
Mumbai , Feb. 22 LOSSES arising out of culling of birds affected by avian flu are covered by insurance, officials of public sector companies clarified on Wednesday. "Culling of birds to prevent a communicable disease affecting human beings as well as culling undertaken on the instruction of the Government is covered by insurance policies," a senior official of a general insurance company said. Bird flu is not among the diseases, which are part of the exclusion list. "Marek's disease, ranikhet, fowl pox and infectious bronchitis are among the diseases that are not covered under poultry insurance policies. However, if birds that are vaccinated are affected by these diseases then the insurance policy would cover these losses," said the official. The claims to premium ratio with respect to the poultry insurance segment is said to be more than 200 per cent. This is mainly due to epidemics, other than bird flu. The maximum sum assured under Government scheme for a broiler is Rs 15 and Rs 25 for a layer. Under private schemes, the sum assured increases to Rs 45 for broiler, Rs 75 for layers and Rs 100-Rs 200 for hatching birds. However, insurers said that they might either include bird flu in the exclusion list or bring in loading to the premium for coverage of the deadly disease in the future. At present, 25 per cent of poultry insurance comes along with bank finance. State Bank of India, which has a branch in Navapur, where large number of birds was killed, has an exposure of Rs 57 lakh to poultry units, said an official in charge of agri-business. As many as 23 units assisted by SBI have been hit by the killer flu. The loss to the bank may be about 70 per cent as the amount includes money lent for both the birds and the sheds, the official said. These loans were given at a concessional interest rate of 9 per cent, against the usual rate of 9.5 to 11 per cent, under the bank's priority lending. Following the bird flu, the bank may allow some restructuring of the term loans, such as increasing the repayment period by one year, the official said. "Poultry is a main activity in this area as it is a tribal area and no other agricultural or farming activity is feasible. We may go for fresh lending after the sterilisation period of one or two months," he said. According to an officer from Bank of India, the bank's exposure to poultry farming would not be much, just about 2 per cent of the bank's total farm portfolio. The bank has also asked for information from other States, he added. The penetration of poultry insurance is also low. According to insurance company officials, only around 5-10 per cent of the chickens in the country would be covered by insurance. The main buyers of poultry insurance are usually big hatcheries and poultry farms. As per rough estimates from insurance companies only around 2 crore birds are covered under insurance. The highest number of chickens that are insured come from Andhra Pradesh and Maharashtra followed by Punjab and Haryana.
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