The Hindu Business Line : Insurance cos set to launch special schemes for plantation crops

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Insurance cos set to launch special schemes for plantation crops

Premium subsidy likely to be around 50%

In case the crop fails, insurance would cover the replanting cost as well as the loss of income.

Radhika Menon

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Mumbai, March 2 Insurance companies are gearing up to introduce a range of specialised covers for plantation crops. This follows the premium subsidy announced by the Finance Minister, Mr P. Chidambaram, for this sector.

The state-owned Agriculture Insurance Company (AIC) is designing specialised products for several crops in consultation with the Ministry of Commerce and Industry, said a senior official at the company. The premium subsidy is likely to be around 50 per cent.

So far, plantation insurance has not been well received, as it is perceived to be an additional cost particularly since products like coffee, tea and rubber had witnessed a fall in prices a few years ago. The Government established a Price Stabilisation Fund in 2003 for financial relief to these growers.

High risk

The Finance Minister in the Union Budget 2008-09 announced that insurance schemes would be introduced for plantations crops like tea, rubber, tobacco, chilli, ginger, turmeric, pepper and cardamom.

Plantation crops involve a high degree of production risk since they are perennial crops unlike field crops like rice and wheat, which are seasonal. In case the crop fails, insurance would cover the replanting cost as well as the loss of income, said the AIC official.

AIC has also been working on other plantation crops. The company recently launched ‘Rubber Plantation Insurance’ on a ‘named peril’ basis, covering both mature and immature plantations. The policy pays up to Rs 5 lakh per hectare as compensation. The company introduced coffee insurance last year in Karnataka and Tamil Nadu.

“We are also ready with an insurance product for coconut palms, which has been developed in consultation with Coconut Development Board and will be available in select districts of Kerala, Karnataka, Andhra Pradesh and Maharashtra,” said the official.

Private players

AIC had written premium of Rs 560 crore for 2006-07 and the company’s target for 2007-08 is Rs 700 crore.

ICICI Lombard General Insurance is also firming up products for jatropha, coffee and tea plantations that will be introduced this year. The company is awaiting clarification from the Finance Ministry on whether private companies would be allowed to participate in the Government’s project.

Mr Pranav Prashad, Head-Rural and Agriculture Business group, ICICI Lombard, said, “Apart from insuring against fluctuations in weather, we may also offer cover for specific perils like floods and hailstorms. We are in talks with a few companies,” he said.

ICICI Lombard has written premium of Rs 25 crore from weather insurance of crops and other commercial projects this year.

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