ICICI-Lombard exits crop insurance biz

Mumbai: ICICI Lombard General Insurance has decided exit crop insurance under the Prime Minister Fasal Bima Yojana, citing high rates quoted by reinsurance companies. Crop insurance contributed 16% to the private insurer’s topline and was the third largest business after motor insurance and health.
The company, in its results on Friday, said that its gross direct premium income for the first six months of FY20 fell 11.8% to Rs 6,440 crore from Rs 7,305 crore in the first half of FY19.If crop insurance were to be kept out, the company’s premium from all other segments were up 16.2% higher from Rs 5,495 crore last year.
“We made a conscious choice of not doing crop insurance as reinsurers have been hardening the rates for the last year’s claiming the claims experience is not favourable. There has been a reduction in the commissions paid by reinsurers which do not cover the cost,” said Bhargav Dasgupta, MD and CEO, ICICI Lombard General Insurance. He said that although there were no large catastrophic incidents, local conditions have resulted in claims in this segment.
“Crop accounted for 16% of our portfolio last year. If we can grow above 16% this year, we will be able to show growth,” he said.
In its results, the company reported a 5% rise in net profit at Rs 308 crore for the quarter ended September 30, 2019 up from Rs 293 crore in the corresponding period last year. The board has declared an interim dividend of Rs 3.50 per equity share. For the six-month period net profit rose 6.1% to Rs 618 crore.
Dasgupta said that the company’s erstwhile partner Fairfax group completely exited the company by selling its remaining shares in the open market.