News eDaily26 Jul 2017

India:Global reinsurers cut exposure to crop insurance

26 Jul 2017

Global reinsurers are losing interest in Pradhan Mantri Fasal Bima Yojana (PMFBY), the government's flagship crop insurance scheme which was launched last year.

Sources in the industry said that global reinsurance companies with presence in India have considerably reduced exposure to this scheme, reported Moneycontrol without naming its sources.

A senior industry official said that without foreign reinsurance support, Indian reinsurance support will not be able to sustain the scheme.

The targeted coverage under the scheme has been increased to 40% of cropped area in the current fiscal year ending March 2018 (FY18).

"While the domestic reinsurer, General Insurance Corporation of India (GIC Re), is providing cover for crop insurance, this may not be adequate when 50% of cropped area is covered in FY19. We will need global reinsurance support for that," said a senior public sector insurance official.

In India, while government-owned GIC Re shares about 50% of the risk as a reinsurer in crop insurance policies, the balance is taken up by international reinsurers.

The PMFBY will have a higher profile in FY2018 as the government has allocated INR90 billion (US$1.4 billion) for the scheme but may have to increase the provision. In 2016-17, the government allocated INR55 billion but later revised the Budget estimate to INR132.4 billion.

Data from the IRDAI show that for the kharif (monsoon) season from June to November 2016, insurance companies grossed more than INR158.9 billion in premiums from the PMFBY. Claims amounted to a little over INR59.6 billion.



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