Innovative Products of NICL

NICL's biggest challenge was to put together a worthwhile national scheme for Agriculture Crop insurance. From 1994 onwards many schemes were evolved by private and public sectors but not considered feasible by the Government as those fell short on most of the accounts and relied on subsidy from the government.
It was found from the review of the previous schemes that the reason for non-materialisation of those schemes was due to high premium rates, required contributions of subsidy from the Govt. and non availability of Reinsurance. Based on research NICL decided to develop a crop insurance scheme which will cover the Bank Agri-Loans of the Farmers to the extent of its exposure and related to the crop against natural calamity and other perils.
For evolving of such a scheme NICL worked closely for more than three months with the agencies like NBP, MINFAL, Cotton Research Institute, Plant Protection, Met Department, Relief Wings of Provincial Departments etc & to prepare adequate underwriting information to negotiate and finalise with the reinsures for quoting us a reasonable quotes. In result, NICL is in a position to offer 3 comprehensive products which are backed up fully to 300 to the 500% of the premium received, by world's top reinsures at the rates which are surely affordable by our farming community.
The first Crop insurance product which is arranged to be backed up by Swiss Re, an AA security, is a basic product which would cover natural/atmospheric peril and will be available to farmers through the loaning bank at the rate upto 1.25%. The operations are easy and maximum facilitation is offered. Second product is more comprehensive in nature. It will cover all crops and livestock. Rates are from 1.5% to 1.75%. It will cover all natural perils in addition to pest, locust and other viral diseases. It will be supported by Lloyds Syndicate. Third product is most comprehensive and is being offered against NICL's own resources.
It is directed at the farmers of the select districts of the four provinces and will cover all perils, natural and managed like fire, theft, canal breach etc. Claim will be assessed by specially designated two top surveyors with appropriate skills. Our vision is "a product which would insure the bank agri loan of the farmer to the extent of its exposure and relate it to the crop against natural calamity and other perils. The idea is to give the commercial bank a confidence level by insurance of its assets so that it can spread its wings and extend coverage and consider reducing lending rate of insured agri loan.
Terrorism apprehension has restricted avenues of export promotion and has inhibited inflow of foreign investment to our country. We took up the challenge. Then after detailed research, looking at number of travellers and the history of incidences of terrorism, we decided to assume this risk against our own resources. The result is an attractive insurance product with realistic levels of compensations, not many exclusions and at the rates which are indeed affordable and comparable to offered by other groups for low risk areas. We have also provided maximum facilitation for this product.
A traveller can go to our website, fill-in application form and apply via internet. He can claim his policy papers on arrival at the designated airport in Pakistan from the customer relations counter after paying the prescribed premium. While we were at it we also decided to upgrade political risk for industrial property as well. Its ceiling has been increased and rates reduced to make it more attractive and useful for the country.
Our Third task was to develop products for Micro insurance. In the insurance policy NICL has been designated as the National Coordinator for the same. We have so far developed 4 products for loss of life, health and asset which takes care of the risk exposure and economic distress of the low income group in a very comprehensive way. We reviewed and attempted to refine the local insurance products. We drew on the resource of foreign agencies like Opportunity Network of Washington, D.C, CGAP Working Group on Micro Insurance of ILO, Micro Insurance Research Centre of UK, etc.
The idea was to offer realistic and practical, a state of the art products to our people. We plan to market these products through Micro finance agencies on profit sharing basis, as they already have identified and maintain a database of the low income families. We will insure the exposure of the loan which generates the asset for the under privileged and also take care of it in case of death or disability.
On conclusion, let me assure you that we are not stopping at these so called classic insurance products which are crop related or perils related. We plan to move on to the next generation, more state of the art products which will be indexed based and revenue dependent. If an area receives less than adequate rain fall or the revenue generated is below a certain level, the farmer will automatically be compensated through our schemes. All they have to do is to buy prescribed coupons. These products hopefully will be developed with the skill and support of FAO and USDA through Asian Development Bank. We have already initiated the necessary dialogue.
(The writer is , Chairman & CEO / NICL.)