Hannover Re, the world’s third largest reinsurer, has decided to offer reinsurance cover for the Pradhan Mantri Suraksha Bima Yojana (PMSBY) to encourage insurance companies to participate in the scheme.

The global reinsurer is in talks with several Indian insurers for this purpose, Ankur Nijhawan, Managing Director, Hannover Re Risk Management Services India, told BusinessLine here.

Having a reinsurance cover will encourage more Indian insurance companies to participate in the PMSBY scheme and improve its penetration in India, he said.

Currently, public sector general insurers are taking the lead and promoting PMSBY in big way in association with banks.

If Hannover Re were to enter into pact with insurers here, then it would be cross-border business for the global reinsurer, which currently does not have a branch in India to directly underwrite it.

Asked about the viability for reinsurance given that the premium payment involved per bank account-holder was just ₹ 12 a year for cover of ₹2 lakh, Nijhawan said it would be viable given the size of the market.

Out of the ₹12-annual premium paid for accident cover, the participating banks get ₹2 toward their fees.

PMSBY offers a renewable one year accidental death-cum-disability cover of ₹2 lakh (₹1 lakh for partial permanent disability) to all savings bank account-holders in the age group of 18 to 70 years for a premium of ₹12 a year per subscriber. This scheme is currently delivered through banks, including regional rural banks and co-operative banks.

For the Pradhan Mantri Jivan Jyoti Bima Yojana — which offers life insurance coverage of ₹2 lakh for any savings bank account-holder on payment of ₹330 a year, he said the reinsurance cover is being provided in association with GIC Re, which is the Indian national reinsurer.

Nijhawan lauded the government’s efforts in “dramatically improving” the “ease of doing insurance business” in India. He said that the aim of Hannover Re would be to offer all its services in the Indian market and the proposed branch would help meet this aspiration.

The recently amended insurance law would pave the way for Hannover Re and other top global reinsurers to set up a branch office in India.

Nijhawan also wanted the government and insurance industry to collaborate and design a fixed income insurance product for farmers. Currently, there is no product in the market that covers the fluctuation in incomes of farmers. “The industry (insurance) should lend its full support for such a product”, he said.

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