IN a first of its kind move, aimed at providing crop insurance to farmers across the country on a sustainable basis, the Government has initiated measures to create a national agency that would evolve an integrated risk management package through a judicious mix of private and public insurance efforts.

"Accordingly, the Government is planning to float an independent company — National Agricultural Insurance Company — for farmers to manage and provide for all aspects of crop-related insurance activities," a senior official of the Insurance Regulatory and Development Authority (IRDA) told Business Line.

The promoters of this initiative would be General Insurance Corporation (GIC), the National Bank for Agriculture and Rural Development , National Insurance, New India Assurance, Oriental Insurance and United India Insurance. While GIC and Nabard would have an equity holding of 35 per cent each, the National Insurance, New Indian Assurance, Oriental Insurance and United India Insurance would share the balance 30 per cent, sources said.

"A new network of offices would dot the country in addition to using the existing infrastructure of Nabard and GIC offices. Nabard will be part of the management and shall offer technical advice. GIC would only serve as a reinsurer to the new entity," they said.
According to the IRDA officials, though the core focus of the new entity would be crop insurance, it would later on extend the cover to tractors, pump-sets, cattle and even huts.

Agriculture is prone to natural vagaries since it is extensively, directly and continuously in contact with the forces of nature, which made it a risk enterprise. However, our country lacks an integrated risk management approach that was adopted by the developed countries, which include use of insurance both public and private to stabilise the agriculture industry.