The company has, in fact, recently submitted an estimate of possible claims from the drought-hit farming community.
In the estimate, we have calculated the possible claims for the ongoing Kharif season to be in the tune of Rs 1,500 crore. We are expecting a good number of farmers approaching us for claim settlements by the fiscal-end, as all of them who availed loans have to ensure repayments, a senior official of AIC said.
AICs estimate holds water as finance minister Pranab Mukherjee last week said the countrys farm production in the Kharif season could fall by 15-20% due to poor monsoon. For impact of production on the Kharif crop, exact quantum will be known only when the harvesting starts. But from the picture of sowing, one can easily estimate that there is likelihood of a shortfall to the extent of 15-20%, he said.
The total agri insurance claims that were settled during 2008-09 with the involvement of AIC were Rs 2,200 crore, of which the companys share was Rs 600 crore.
In claim payments, AICs liabilities are limited to the total premium collected during the year and any extra claims for payment are divided between the Centre and the respective state government in a ratio of 50:50.
From AICs side, we have paid a total claim worth of Rs 834 crore during 2008-09. Total premium collected by us during 2008-09 was at Rs 360 crore, said the official.
In the current fiscal, AIC has already collected Rs 400 crore as premium. The total premium collected by AIC for weather-based crop insurance during 2008-09 was Rs 73 crore, of which 78% was reinsured by reinsurers like GIC Re, Swiss Re and Paris Re.
However, other domestic insurers in the agri-insurance space are yet to prepare themselves to pay drought-related compensation. S Narayanan, managing director & CEO, Iffco-Tokyo General Insurance said drought has not yet affected the general insurance industry on a whole, except for claims relating to rainfall deficit. The company has a policy in this segment titled as Barish Bima.
Though it is too early to say if the drought has affected the whole country, crop insurance will be affected by the drought, he added The company will start working out the claims settlement under this segment only when the season is over. We will have an ending date for this and which will begin only after receiving data from the Indian Meteorological Department, he said.
On whether premium on the affected segments will be hiked by the insurers Narayanan said, It will depend on the calculation to be done by our actuaries. We will have to take a long-term average for the purpose. We do not depend on any government support for this portfolio.ICICI Lombard MD & CEO Bhargava Dasgupta said it was probably too early to declare the country drought-hit .
Rains have again started pouring in. If the trend continues for some time, we are sure to have good rainfalls. As regards drought-like condition, we will have to see the long-term pattern of rainfall, he explained. Crop insurance comprises a very small segment of our entire portfolio and hence we are not worried about the claim settlement, even if it comes during the remaining part of the current fiscal, he said.