Agriculture Ministry To Rope In Brokers To Increase Penetration Of Crop Insurance Scheme

The Ministry of Agriculture is reportedly planning to rope in insurance brokers to increase the penetration of its crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY), starting this year. 

As per Economic Times, the Ministry plans to leverage 12 Lakh point-of-sales persons (PoPs) employed by insurance brokers to spur the adoption of crop loans among farmers. The collaboration is expected to commence from the kharif season (June-October) this year. 

“Utilising such an extensive network of over 12 Lakh PoSPs via insurance brokers offers a substantial opportunity to increase non-loanee farmer enrolments. This strategy significantly enhances the enrolment of non-loanee farmers,” the Ministry reportedly said in a consultation note.

As per the report, the Centre last week held a meeting with stakeholders of the insurance industry to debate a draft service-level agreement (SLA) to empanel brokers for the crop insurance scheme. The meeting was attended by the likes of insurance companies, reinsurers and insurance brokers. 

At the present, the Centre is said to be deliberating the qualification criteria for the pre-empanelment of insurance brokers, service charges, among others. 

The move to rope in brokers could enable the Centre to increase the number of non-loanee farmer enrollments. On the other hand, the partnership could also help brokers increase their insurance portfolio and earn more commissions by leveraging their existing PoSP base. 

The move could also help homegrown new-age tech companies in the insurtech space to create alternate sources of revenue. As per insurance regulator IRDAI website, subsidiaries of big names such as PhonePe, Paytm, InsuranceDekho, among others already have a broker licence and may be eligible to participate in the scheme. 

Speaking to Inc42 last year, InsuranceDekho founder and CEO Ankit Agrawal said that the insurtech startup was leveraging its “LIC-like playbook of having a strong network of on-ground agents” to fuel growth in revenues. 

A similar playbook could be used by other fintech players with broker licence to tie up with the government and increase insurance penetration among farmers. But questions remain over the efficacy of these players as they are primarily focussed on urban Indians. 

Banking on tailored offerings and compelling value propositions, India’s insurtech sector has spawned a series of new startups in the past few years on the back of growing penetration of affordable smartphones and internet. 

Names such as Acko, listed GoDigit Insurance, among others cater to a diverse range of clients and have multiple offerings. 

As per an Inc42 report, the homegrown insurtech sector is expected to grow to a market size of $307 Bn by 2030.