Money & Banking

‘Distribution is key challenge for agri-insurance’

| | Updated on: Mar 10, 2011

ICICI Lombard, which has covered 1.3 crore farmers in 65 districts in 11 States and insured 2.87 lakh farmers, covering 18 lakh acres, has said that distribution is a key challenge to reach to all the farmers in depth.

"Acceptability and awareness levels of insurance as a subject are very low in rural areas," Mr Alok Agarwal, Director (Corporate) of ICICI Lombard General Insurance Company Limited, told Business Line.

Mr Agarwal said Modified National Agricultural Insurance Scheme (MNAIS), which was being introduced by the Union Government as an alternative to the ongoing National Agricultural Insurance Scheme (NAIS), too would give a fillip to agriculture insurance. The new scheme was being introduced on a pilot basis in 50 selected districts from the rabi season 2010-11.

ICICI Lombard has been allocated Dehradun in Uttarakhand and Sheopur in Madhya Pradesh for implementation.

With the introduction of the modified scheme, it was expected that an increased number of farmers would be able to manage risk in agriculture production in a better way. "It will succeed in stabilising farm income particularly at the times of crop failure on account of natural calamities, he pointed out.

Mr Agarwal, who was here to attend a CII meeting recently, said private insurance in agriculture had begun to take roots in the country despite low levels of understanding.

Of the 2.87 lakh farmers and 18 lakh acres the company covered so far, 2.42 lakh farmers and 16 lakh acres were covered in the rabi season of 2009-10 alone.

"Though agriculture accounts for 24 per cent of country's GDP, rural economy is still characterised by a low penetration of risk management solutions and faces economic strain due to the variability in agricultural production," he said.

According to him, weather insurance would go a long way in increasing the penetration of agriculture insurance. This ensures immediate compensation as against the delayed pay-outs in the traditional insurance schemes.

"The index-based insurance product covers weather-related risks faced by crops such as excess or deficit rainfall, temperature variation and humidity," he said.

"Weather based crop insurance scheme is an effective scheme as it ensures that the farmers are prevented from the losses due to adverse weather conditions and mitigate their unexpected hardships," he said.

This scheme facilitates immediate compensation based on certified data collected from independent third party bodies such as Indian Meteorological Department (IMD) and National Collateral Management Services Ltd. (NCMSL).

Published on March 10, 2011

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