annual report 2009-10 - IRDA

ANNUAL REPORT 2009-10was a quantum jump in coverage under NAIS, withalmost 24 million farmers insured, who grew crops onover 33.9 million hectares for a sum insured (riskcoverage) of `38,600 crore, earning a premium of`1,150 crore. In terms of the farmers insured, NAIS isthe world’s largest crop insurance programme.Because of unprecedented drought conditions whichprevailed during Kharif 2009 season, the claimsreported for 2009-10 were expected to be over `5,000crore.I.4.10.2 A proposal to introduce a modified version ofNAIS has been approved ‘in principle’ to be piloted in50 districts w.e.f. Rabi 2010-11 season. Under theproposed scheme, the key modifications to the existingscheme include:• Reduction of Insurance Unit to Gram Panchayat(3 to 4 villages) level for major crops• Guaranteed yield to be based on average of past7 years, excluding the year(s) in which a naturalcalamity may have been declared by thegovernment• Existing 60 per cent indemnity limit to beupgraded to 70 per cent• Coverage of pre-sowing and post-harvest risks• On-account payment of compensation during theseason upto 25 per cent of likely claims, usingweather index, crop health index, etc.• Individual farm assessment of claims in case oflocalised risks like hailstorm, landslide, etc.• Premium rates to be based on actuarial regimewith up-front subsidy provided by thegovernment, and insurance company would beresponsible for all claims in actuarial regime.Weather InsuranceI.4.10.3 The Government of India is piloting WeatherBased Crop Insurance Scheme (WBCIS) in a fewstates as a substitute for National AgriculturalInsurance Scheme (NAIS) since Kharif 2007 toevaluate the strengths and weaknesses of thesemodels. Weather (Rainfall) based crop insurance wasimplemented on a pilot basis in Karnataka duringKharif 2007 season, and subsequently in Bihar,Chhattisgarh, Madhya Pradesh and Rajasthan duringRabi 2007-08 season. The pilot study was extendedto about 10 states during 2008-09, and 14 Statesduring 2009-10. During 2009-10, AIC covered over 2million farmers who grew crops on over 2.7 millionhectares for a sum insured of `4,000 crore, earning apremium of `360 crore. The private insurers who havebeen permitted by the government to participate insuch coverage, implemented the pilot WBCIS in sevenstates, covering 0.24 million farmers who grew cropson over 0.64 million hectares for a sum insured of`850 crore, earning a premium of `93 crore. The pilotWBCIS implemented in the country is the World’slargest weather insurance programme in theagriculture sector. The outlook of WBCIS for 2010-11appears bright, as the coverage during Kharif 2010alone exceeded the entire coverage of 2009-10.Insurance of Plantation CropsI.4.10.4 To mitigate the increasingly uncertainproduction risk of Plantation and Spices Crops, thegovernment of India is considering a proposal ofcomprehensive crop insurance for crops like tea,rubber, tobacco, cardamom, pepper, etc. Meanwhilea pilot coconut palm insurance designed by AIC inassociation with Coconut Development Board (CDB)has been piloted in about 20 districts spread acrossseven states. Insurance proposals for other crops arepresently being examined by the government. AIC hasbeen implementing rainfall based insurance for coffeewith premium subsidy from the Coffee Board, since2007.4.11 MICRO INSURANCEI.4.11.1 In India, more than two-third of the populationlives below poverty line and therefore importance ofmicro insurance is undeniable. Most of the people inthis segment are not only illiterate, their level ofawareness about insurance is also very low. In orderto facilitate penetration of micro insurance to the lowerincome segments, IRDA has formulated the MicroInsurance regulations. Micro Insurance Regulations,2005 provides a platform to distribute insuranceproducts which are affordable to the rural and urbanpoor and to enable micro insurance to be an integralpart of the country’s wider insurance system.I.4.11.2 The main thrust of micro insurance regulationsis protection of low income people with affordable54