Cyclone has caused much damage; sum assured on the crops in the region is Rs 3k crore
Cyclone HudHud that hit the coastal regions of Odisha and Andhra Pradesh over the weekend may not have claimed many human lives, but the damage it brought to crops may cost insurers up to Rs 1,500 crore.
The two states were hit by a similar storm a year earlier. Cyclone Phailin in 2013 had also cost Rs 1,500 crore to insurers. The Agriculture Insurance Corporation alone had shelled out Rs 1,200 crore under the National Agriculture Insurance Scheme, Modified National Agriculture Scheme and Weather-Based Insurance Scheme at the time.
This time, too, claims will come under yield-related insurance products like the National Agriculture Insurance Scheme and Modified National Agriculture Scheme, said an Agriculture Insurance Corporation executive. Private-sector insurers HDFC Ergo and ICICI Lombard are also active in writing weather-based insurance cover.
Despite facing large claims last year, insurers could not increase premiums as rates are capped. But they have shrunk coverage. “We are not allowed to raise premium rates so we have tweaked terms of insurance to cope with heavy losses from recent incidents,“ said an executive from an insurance company.
Weather-Based Crop Insurance Scheme is intended to provide insurance protection to the cultivator against adverse weather incidents, such as deficit and excess rainfall, frost and heat wave conditions.
Farmers in Jharkhand and Chhattisgarh, which are also likely to see some impact of Cyclone HudHud, could get only limited claim payout under the Weather-Based Insurance Scheme since the two states have crossed the period for which the scheme is valid.
“We are keeping a tab on the situation and there will be some claims under the weather-based insurance cover from Chhattisgarh,” said Sanjay Datta head of motor insurance ICICI Lombard.
Crops insurance is provided for the two seasons of kharif and rabi. More than two lakh hectare of farmland was devastated when cyclone Phailin hit the coastal areas of in Andhra Pradesh and Odisha on October 12, 2013.
Also, over Rs 5,000 crore of crop loans could turn bad because of the damage to crops from the hailstorms that several parts of the country witnessed early this year.
Source: Economic Times
Date: 14th Oct, 2014