Financial Daily from THE HINDU group of publications
Monday, Mar 06, 2006
Financial Daily from THE HINDU group of publications Monday, Mar 06, 2006 |
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Money & Banking
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General Insurance Agri-Biz & Commodities - Insurance New India designs cover for commercially viable crops Radhika Menon
READY FOR COVER: Jatropha cultivation at a wind power generation mill. — M. Balaji
Mumbai , March 5 Insurance for commercially viable crops seems to be the new mantra for reviving the crop insurance business. New India Assurance has designed an insurance cover for the jatropha plant, which generates bio-diesel. Also, on the cards is a cover for the stevia plant, which is used as a sugar substitute. A senior official of New India Assurance said the company hoped to target energy firms with insurance cover for the jatropha plant. "The cover will be offered mainly in Maharashtra, Gujarat, Madhya Pradesh and Tamil Nadu where jatropha plant is cultivated," said the official. The insurance cover for stevia plant will be introduced in West Bengal and Gujarat. New India Assurance has been working with the agriculture university and forest departments to design these products. The insurance policy for the jatropha plant will cover losses incurred while cultivating the plant and not the output or produce. This is mainly because the gestation period of the plant is five years.
Premium amount
The premium will be on the basis of the choice of cover and the sum assured, which will be decided along with the forest department. Hence, the premium would be 1.25 per cent of the sum assured in the case of normal risks, 0.5 per cent in the case of waste and disease and 0.75 per cent in the event of a drought. The normal risks include natural calamities such as earthquake, flood and forest fire. With these insurance products, New India Assurance has a much higher target for its rural insurance portfolio this fiscal. The company hopes to rake in Rs 85 crore, up from the previous year's Rs 62.7 crore. According to the official, the claims ratio in rural insurance has been over 100 per cent. The bulk of the portfolio in terms of premium (50 per cent) comes from cattle insurance, which sees a claims ratio of 80 per cent. But the claims are mainly seen in farmers' package policies (cattle and crops) that have a claims ratio of 377 per cent and poultry insurance, where it is over 100 per cent.
Rural markets
Analysts say that only one per cent of the potential of rural insurance has been achieved. In fact, 90 per cent of rural insurance is through bank finance, which means that a borrowing farmer is forced to purchase an insurance cover.
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