Malaya Poddar,CMD, Agriculture Insurance Company

AIC’s market share in Crop Insurance increased from 29 % to about 50 % currently over the last 3 years

AIC has recently obtained a full-fledged “Agriculture Insurance” license from the regulator IRDAI which it has been aiming for sometime to expand its footprint covering entire gamut of Agriculture and Allied activities under insurance. This is a major change in AIC’s history which will usher in AIC to be one of the largest Agriculture Insurer globally

How has been your performance in 2021-22?

The performance of AIC has been excellent in the last two years.

AIC is a general insurance company, with a limited licensing scope of “ Crop Insurance” till 27th April 2022.

Since its commencement of business from 2003-04, it has been predominantly implementing our country’s national Crop Insurance programs launched by Government of India (GoI) from time to time in an exclusive manner.

Currently, it is insuring more than 4 crore policies on an annual basis.

In addition to implementing the Government schemes, the company also has various other in-house products for Crop Insurance which is not covered in the Government implemented schemes to provide protection to the farming community.

The company constantly strives for improvement by way of innovation in product design and implementation of the latest technology initiatives (like Remote sensing technology for Loss assessment) for the Crop insurance segment.

The company has also now obtained an extended license for other allied businesses (except Health and Life) serving the entire agriculture sector.

Achievement of AICIL over last 3 years:

•Market share amongst Crop Insurance had increased from 29 percent to about 50 per cent currently over the last 3 years.

•Maintaining healthy solvency position consistently over the period more than 2.00 times, despite consistent growth in business and higher retention over the last couple of years.

•Consistent reporting of profit over the past years (except for FY 2019-20) where the loss ratio was higher in a couple of states where major Catastrophe events occurred.

 What is your claim settlement ratio?

The claim settlement ratio for crop insurance is dependent upon the release of the premium subsidy by the State and Central Government. Therefore unlike in other general insurance lines of business, this ratio is not very relevant for the government crop insurance scheme.

However, since AIC believes in its accountability as to settle all eligible claims promptly who need it most faced by a disaster, the same are settled as per the suggested turnaround time subject to receipt of premium subsidy.

What is your retention ratio? Do you get enough reinsurance support for your business?

AIC’s retention ratio is the highest among all the participating insurance companies at around 50 per cent.

Of late, reinsurance support has become a challenge, but we have been able to overcome the challenge so far.

What are the new initiatives you took to grow AIC’s business and improve on customers’ benefits ?

AIC has been very strong in taking new initiatives in Crop Insurance. AIC pioneered the operational use of the latest remote sensing technology in collaboration with the National Remote Sensing Centre of ISRO.

Apart from this landmark initiative, AIC has many financial and non-financial partnerships with various international and multinational organizations, and insure-tech start-ups, in developing new insurance products for crop insurance using the digital path.

Usage of technology brings in transparency and objectivity in loss assessment and hence improves customer benefit. In no uncertain terms, technology and innovation are the way forward to increase penetration in rural areas.

How technology friendly AIC has become internally as well as in dealing with customers?

AIC’s all processes are system driven. It has a full-fledged grievance redressal system integrated with IRDAI’s Grievance Management System.

The Board reviews the detailed reporting of grievance redressal position periodically as per regulatory requirements.

AIC’s Grievance redressal ratio is one of the best in the industry.

Apart from PMFBY business, any other areas of crop insurance business you do?

AIC has created a fully dedicated vertical, namely Emerging Market, which is focussing on the PMFBY-left-out areas and constantly developing and piloting new products.

AIC has started active interaction with the intermediary community, enhancing their capacity by detailing the new products, enabling them with its in-house designed and developed Mobile Application based policy issuance facilities.

Intermediaries are keenly interested in marketing AIC’s new products viz. Sampoorna Fasal Kawach, Consequential Crop Loss Policy, Fasal Bhavantar Kawach, Fasal Ritu Kawach, etc.

They are reaching out to the farmers and farmers have started showing interest too. It is expected that AIC’s new crop insurance product marketing will scale up sooner than later.

Though government had a huge target of covering 50 per cent of farmers in the country under PMFBY business, the coverages in terms of areas and farmers have fallen over the years and the scheme has  faced many criticisms, difficulties and undergone many changes.

Is it now working OK in its present format? What more you would suggest need to be done to make it more popular among farmers and insurers?

Government is very actively reviewing the Scheme implementation and that is the reason it is undergoing changes which are always based on feedback received from the key stakeholders including farmers and other important agencies.

It is still very much possible to reach the target if the premium rates come down by exploiting more and more technology to bring in more transparency and objectivity in loss assessment.

A combined intervention of technology with risk participation approach will bring down the cost of insurance and thus will be more affordable for the States to participate.

This will increase penetration. PMFBY as such is a very comprehensive crop insurance solution combining the index based indemnity at an insurance unit level (which are majorly Gram Panchayats) and individual indemnity at farm level. If the operational challenges are overcome, the scheme will be more affordable to expand across the country and will be sustanaible too in the long run. 

What is your unfinished agenda in AIC?

AIC has recently obtained a full-fledged “Agriculture Insurance” license from the regulator IRDAI which it has been aiming for sometime to expand its footprint covering entire gamut of Agriculture and Allied activities under insurance.

AIC’s Board is upbeat about this new development as given the financial strength AIC should be able to expand its business into other lines, viz, farms equipment and other asset insurance, livestock, poultry, piggary, aquaculture, warehouses and so on.

AIC has already taken the required steps to create the in-house capacity building and roped in National Insurance Academy(NIA), Pune, the premier iInsurance research and learning institute of the country for an action oriented business diversification and expansion.

This is a major change in AIC’s history which will usher in AIC to be one of the largest Agriculture Insurer globally.