Faced with significant losses from natural calamities, a number of general insurers are understood to be reviewing their crop insurance portfolios and even considering moving out of the segment.
While ICICI Lombard General Insurance has already announced its decision to exit crop insurance under the Pradhan Mantri Fasal Bima Yojana (PMFBY) due to high reinsurance rates, industry data suggest that Cholamandalam MS General Insurance has also exited the segment.
According to government data, the gross premium under PMFBY in FY19 is estimated to be ₹20,923 crore, while the claims amounted to ₹27,550 crore.
Significantly, state-owned re-insurer General Insurance Corporation of India (GIC) has also scaled down its crop insurance portfolio in the face of huge losses and claims.
Data from the General Insurance Council reveal that the gross direct premium income for Cholamandalam MS fell nearly 91 per cent in the first six months of the fiscal year to ₹5.26 crore, against ₹210.87 crore in the same period a year ago. Cholamandalam MS did not respond to an email query from BusinessLine .
Gross direct premium up
Interestingly, gross direct premium income from crop insurance for all non-life insurers increased 26.5 per cent to ₹19,217.65 crore between April and September this year, against ₹15,185.98 crore in the year-ago period.
“Crop insurance has been doing reasonably well although a lot also depends on the districts with the insurer. The claims ratio has been high for some segments but most insurers remain bullish,” said an industry source, adding that many insurers may choose to come back to the segment next year.
Green shoots, too
Sources said public sector general insurers, such as National Insurance and New India Insurance, have been taking on more crop business along with a few private sector players. Agriculture Insurance Company, a specialised PSU, continues to do the bulk of the crop insurance.
Bhargav Dasgupta, MD and CEO of ICICI Lombard, while announcing the company’s second-quarter results last month, had said that it has not been able to write any crop business this year. “Reinsurance terms have turned adverse for insurance companies, so it doesn’t make sense. Rates on the ground are more aggressive,” he had said.