Talks are underway between insurance and re-insurance companies for launching the much-awaited crop loan insurance scheme (CLIS) of the State Bank of Pakistan (SBP).
"The insurance companies are negotiating modalities with the re-insurance firms. They would see all risks, portfolios, maximum limits of liability etc, as it is the first ever scheme to be launched in the country", sources in SBP told Business Recorder on Tuesday.
They, however, clarified that the scheme could not be launched within the stipulated time due to the extra cautious attitude of the insurance firms, to avoid any untoward situation.
Secondly, they said, the insurance companies could not go ahead with the CLIS without re-insuring it, as they would need to have a 'back cover' which could protect them against any financial risks in future. "The 'value-addition' process is going on, as SBP wants to make the scheme farmer-friendly to maximum possible extent," they added.
Initially, five insurance companies including Adamjee Insurance, EFU General, New Jubilee Insurance, United Bank Limited (UBL) Insurance and East West Insurance and SBP were carrying on discussions on the rate of premium after reaching a conceptual agreement on the scheme.
Sources said the insurance companies wanted the premium to be fixed at 4 percent for one crop, while SBP proposed about 2 to 3 percent. But now, they said, everything including the premium rate, maximum liability limits etc would be determined in accordance with the agreement between insurance and re-insurance companies.
"The CLIS can not be launched until it is certified and covered by the re-insurance firms which are mainly based in Netherlands and are very few in number when it comes to the schemes like crop insurance", they added. When asked what would be the limit of maximum liability sources said the farmers would have their one crop insured according to their borrowings from banks.
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