Indian state backed reinsurance firm General Insurance Corporation of India (GIC Re) has been able to double its growth thanks to the roll-out of a government backed crop and weather-index insurance scheme.
As the state-backed reinsurer, GIC Re has priority on re/insurance schemes such as the Pradhan Mantri Fasal Bima Yojana, or the Prime Minister’s Crop Insurance Scheme. The scheme has seen a huge increase in uptake of crop and weather-indexed coverage since its launch in February 2016.
Indian publisher Moneycontrol reports that GIC Re has almost doubled its growth thanks to the crop insurance scheme, with growth touching as high as 90%.
Alice Vaidyan, chairman and managing director of the reinsurer, told Moneycontrol that without the crop insurance scheme GIC Re’s growth rate would only have been 40%.
As a result of this growth and the impressive roll-out of the crop insurance product to over 1 million people, Vaidyan said that GIC Re is now the largest agricultural reinsurer in the world.
The success of the scheme is testament to the value that weather-index insurance provides, but for GIC Re it’s been a huge source of premium growth. However, it does raise questions about the reinsurers concentration risk, as by taking on so much crop exposure in its own country, while likely not reinsuring a significant proportion out of India due to the current rules around reinsurance arrangements, GIC Re could be retaining a lot of the scheme’s risk on its own balance-sheet.