Agriculture Insurance Company of India chairman and MD Girija Subramanian on Wednesday said the easing of expenses of management norms for general insurers for the Centre-sponsored Pradhan Mantri Fasal Bima Yojana won’t affect her firm much as it is already operating at a low margin.
However, she admitted that the company is facing competition from general insurers after the insurance regulator Irdai relaxed expenses of management (EoM) norms for the scheme from this financial year.
Currently, the Agriculture Insurance Company (AIC) has 50% share in the crop insurance segment. Issuing notifications in March this year, the insurance regulator brought in new norms regarding the EoM.
Under the new guidelines, the Irdai imposed a limit of 30% of gross written premium as EoM for general insurers. It, however, allowed additional expenses towards the Pradhan Mantri Fasal Bima Yojana (PMFBY), Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jan Arogya Yojana (PMJAY).
Subramanian, who attended the Insurance Leaders Meet-2023 of ASSOCHAM on Wednesday, said the easing of the norms will not impact the company in a big way as it already operates at a very low margin.
Subramanian said after the Irdai eased the norms for the PMFBY, a lot of companies got interested in the scheme.
“We are doing well in crop insurance pan-India. We have a 50% market share… this time there is a lot of competition compared to earlier years. A lot of other companies are participating (in bidding for the PMFBY). Earlier, they were not,” Subramanian told FE.
“The entire tender cycle for the PMFBY is expected to get over by July as all state governments normally complete the tender processes by that time,” she added.
On whether the company is cautious on underwriting crop insurance this fiscal due to weather-related uncertainties such as the El Nino factor, she said, “The pricing team will definitely take care of that. El Nino is a climatic thing and anybody does not know about what will happen. But we have earlier claims records across five to 10 years. Normally, that is what prevails in our pricing.”
Agriculture Insurance Company will launch products for livestock and other lines of businesses related to agriculture for which it has already obtained a licence from the Irdai.
“We got licences for livestock and other lines of businesses related to agriculture. We will develop products in those lines of businesses and penetrate markets with those products,” Subramanian added.