The ministry of agriculture is floating a special Rs 100-crore subsidiary in collaboration with the GIC to undertake the newly revamped crop insurance scheme. Confirming the development, GIC general manager Ashok Kumar said that the institution is in an advanced stage of devising the stop-loss coverage for the multi-crore crop insurance business in cooperation the US-based company.

Explaining the concept of the stop-loss risk coverage, Kumar said that the reinsurance company will only pay for any claim if it exceeds the premium amount received by the insurance company. "The reinsurance scheme will control the loss of the insurance companies that may take place out of thetotal claim. The domestic company will have to pay for any claim if it is limited to the extent of the premiums that the companies have received," Kumar said.

The Federal Crop Corporation provides both insurance and reinsurance coverage "While most of the countries only provide for single peril risk, we are planning multi peril risk coverage for the farmers," said Kumar adding the scheme has been devised after taking the country's climate and geographical situation into consideration. The institution has already sent some data to the US company for its assessment of India's agriculture scheme. A top GIC team, led by chiarman D Sengupta, will visit the US to finalise the deal later this month. The GIC top managment is busy giving final touches to the scheme. In the new scheme, the insurance companies will provide cover to the farmers to the extent they are eligible for the bank finance. The cover is cumpulsory for small and medium farmers and optional for big farmers.