In a bid to protect farmers from various risk factors like crop volatility and fluctuations of commodity prices in the country, Zurich-based leading reinsurer Swiss Re is mulling partnership with the agriculture food chain pan India. The company also wants to offer risk covers to those farmers who generally face untoward circumstances of bankruptcy that force them to end up with suicide.
“As agriculture is a risky business exposed to volatile production and commodity prices, we are planning to work closely with partners in the agriculture food chain across India in order to improve the rural sector’s access to modern financial risk management, especially the affected farmers, ensuring a sustainable food supply for the country,” said a top Swiss Re official on Wednesday.
“India’s growing population is one of the biggest global challenges today. There is a need for insurance companies to reach the rural markets through new marketing mechanism and rely less on the traditional bancassurance model,” he added.
Earlier this year, Swiss Re partnered with the Maharashtra Government to improve crop insurance schemes for farmers in this state. The partnership aimed to increase the awareness on crop insurance and enable sustainable living for farmers, as well as help them fast-track settlement of their insurance claims.
“Through this collaboration, the company would assist in village-level surveys for crop loss through satellite-based imaging,” the official said, adding that the company would also implement a pilot project covering five crops, including Jowar and Cotton.
According to a report by Swiss Re released on Wednesday, the annual agricultural insurance premium, which stands at $ 800 million, (around Rs5,290 crore) may increase to $1 billion over the next five years.
Swiss Re is the second-largest reinsurer in the country which has normally been dealing with large corporate and life reinsurance business so far. However, it is now eying new areas of insurance in the country which include agricultural, aquaculture and livestock insurance.
“Offering localised and tailored policies can be an effective way of convincing livestock farmers to take interest in insurance. Bundling revenue protection cover with livestock insurance could be another,” Swiss Re’s Agriculture Reinsurance Head for Southwest Asia Harini Kannan said.
“Swiss Re has a vast repository of knowledge at its disposal, gained from claims, risk management and products structures from across the world. We aim to translate this experience to the Indian market and offer relevant products to all, especially the underserved,” added Harini.
In India, insurance is bundled with credit, which are not always what farmers need, as the requirement for insurance can be for a longer period compared to the credit period. “If the farmers want to renew their insurance policies, they would be obliged to take out another loan even when they do not need one. The issue is further compounded by lack of adequate about, and access to, insurance and micro-insurance products,” the report said.
The report, however, highlighted the need for increasing insurance penetration in these sectors to bridge the protection gap in India, making the country a food secure nation. #END#