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Cholamandalam MS General Insurance Company Ltd (Chola MS), the joint venture between Murugappa Group and Japan’s Mitsui Sumitomo insurance group, is planning to re-enter the ₹25,000 crore crop insurance business after a gap of three years.
“Nearly three years ago, we took a pause from the crop insurance business. This year, we are looking to re-enter into the crop insurance space. We have even secured reinsurance arrangements for that,” said V Suryanarayanan, MD, Chola MS.
He was addressing a press conference here on Thursday to highlight the company’s financial and operational performance in FY23.
Crop insurance business
Suryanarayanan said the crop insurance business is estimated to be around ₹25,000 crore, out of which public sector insurers handle about ₹12,000 crore while the remaining ₹13,000 crore business is split among the private insurance players. He added that the company has quit the crop insurance business due to issues like non-receipt of premium from some state governments.
He, however, added that some of the operating provisions of the crop insurance business has changed during the last three years, which made the company have a relook into entry into the space.
In the general insurance industry, nearly 80 per cent of the business comes from motor and health insurance, followed by property insurance (12 per cent) and the remaining from crop insurance.
Suryanarayanan highlighted that crop insurance is a tender-based business and insurance companies have to compete through a tender process to get into a particular State. He said the company is looking to operate in States like Madhya Pradesh, West Bengal, Uttar Pradesh and parts of Rajasthan and Maharashtra.
Meanwhile, Chola MS has ended the FY23 with gross written premium (GWP) of ₹6,200 crore, 27.6 per cent higher than FY22. The company’s profit before tax for FY23 stood at ₹264 crore (₹106 crore). As of March 2023, Chola MS had a net worth of ₹2,160 crore and a solvency ratio of 2.01 times against the minimum regulatory requirement of 1.5 times. The company’s investment corpus at the end of FY23 stood at ₹14,715 crore.
Suryanarayanan said Chola MS has a market share of 5.3 per cent in the motor line of business and 4.9 per cent in the personal accident line of business.
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