3 Public Sector Insurance Firms and AIC to Enter Coinsurance Deal for PMFBY
Updated On Jan 28, 2020
In the ongoing advancement, a co-insurance agreement has been entered between Agriculture Insurance Company (AIC) and three state-run general insurance agencies for Prime Minister Fasal Bima Yojna (PMFBY).
Under the plan, the AIC will utilise labour, workplaces and rural reach of the National Insurance, New India Assurance and United India Insurance and will in turn offer 12.5% premium collected to each of these three public sector firms. Rajeev Chaudhary, CMD (officiating), AIC said that this would give a competitive edge to AIC and furthermore help decrease the overhead cost. At present, under PMFBY, the overall premium collected by AIC is nearly 50%. A year ago, the total premium received was about Rs. 7000 Crore and this year it is expected to reach Rs. 14000 Crore.
Chaudhary said that AIC has expertise in claim management and settlement and premium collection, but lacks infrastructure. Thus, it is going to harness its robust database and technical expertise, along with the infrastructure of other companies.
PMFBY premium differs from crops and regions being based on actuarial calculations and rates dependent on risk perception. However, the farmer is required to pay only 2 per cent of the premium, and the rest 5-6 per cent of the premium is borne by the central and state governments each. The premium more often comes to 12-15 per cent.
In the recent past, there has been a disparity in claim settlement due to technological challenges related to crop cutting techniques. Chaudhary said, “Technology will and is streamlining PMFBY implementation. Some technological innovations have already been initiated viz., PMFBY portal by the ministry of agriculture, which has eased enrollment under the scheme. Further, crop cutting experiments data is now being captured and transferred through mobile apps. However, there is no robust technological solution for loss assessment till date, which is acceptable to all stakeholders.”