The Thai General Insurance Association has reported that this year’s 150% insurance claims ratio for crop insurance is the highest in the past four years. Crop insurance premiums are also likely to increase next year to 200%.
As a result of natural disasters throughout this year, claims for crop insurance of 3 billion baht have been paid this year. With a loss ratio registered at 150%, said the Thai General Insurance Association (TGIA).
“The 150% claim ratio in crop insurance is the highest in the past four years, excluding the 2011 flood disaster when claims were as high as 700%, while crop insurance covers 1 million Rai for farms,” said TGIA executive director Kheedej Anansiriprapha.
The TGIA will be closely monitoring claims from drought until the middle of next year, Mr Kheedej said.
An upward revision of crop insurance premiums is highly possible. This also depends on discussions with reinsurance companies, he said.
Expanding insurance coverage to cassava is also on the horizon. This crop has plantation area of about 9 million Rai, Mr Kheedej said.
Although the TGIA has the bargaining power to negotiate with reinsurance companies. Data collection and updated plantation statistics are still needed because the crop insurance scheme has only been in place for four years.
Thailand is among one of Asia’s top five countries for crop insurance business
In 2019, farmers paid more attention to crop insurance. Total premiums for crop insurance under government projects are valued at 2.4 billion baht, covering 30 million Rai of plantation area.
Of the 30 million rai, the main rice crop insurance makes up 27 million. Which accounts for the country’s total rice crop area of 45.3 million rai.
Sompo Insurance Thailand chief executive Chayanna Siripirom said the company plans to expand insurance coverage area for longan beyond Chiang Mai province. It will offer crop insurance for other economic fruits despite experiencing crop insurance claims of 3 million baht.
In February, Sompo Insurance Thailand launched a longan crop insurance scheme. With a crop insurance premium of 299 baht Per Rai. Insurance policies are sold through the Bank for Agriculture and Agricultural Cooperatives’ Chiang Mai branch. Total insurance premiums for this insurance policy are worth about 500,000 baht.
The company’s longan crop insurance provides protection for damage caused by drought. If drought, automatically inspected by satellites, is found and meets predetermined conditions. The company will pay damage claims to longan farmers automatically.
“Our Japanese parent company has acquired Endurance Specialty Holdings, the US’s largest crop insurance company. We also plan to bring knowledge and technology on crop insurance for implementation in Thailand,” Ms Chayanna said.
She said insurance claims are cheaper compared with research expense. While the company can keep statistical data for future business ventures.
Longan insurance is offered by private insurance companies because the fruit does not fall under any government crop insurance project. Apart from Sompo Insurance Thailand, there are a few other Thai insurance firms offering micro-insurance schemes for farmers and fisheries.
Source: Bangkok Post