Cattle insurance business has been commenced w.e.f by GIC of India. The word `Cattle’ refers to : Milch Cows &Buffaloes Calves/Heifers Stud Bulls Bullocks

The age group of animals to be covered under insurance scheme is prescribed as: Milch Cows 2 to 10 years Milch Buffaloes 3 to 12 years Stud bulls 3 to 8 years Bullock 3 to 12 years

Why cattle insurance? Risk reduction mechanisms are working poorly Poorly executed vaccination and other prophylactic measures Lack of good breeding and genetic improvement methods Improper feeding and sheltering facilities with the farmers Poor rural veterinary infrastructure Insurance products presently offered are limited to catastrophic death and disability covers Low penetration of livestock insurance with <10%cattle insured due to Slim Covers Problem with distribution channels Literacy and awareness

YearLivestock Penetration Present6.58% % % % % %

Livestock Management System Risk Transfer : Insurance Risk reduction Strategies: Vaccination, breeding and de- worming AI – Breed development De-worming Vaccination Fodder Development Inputs Identification of animals (for sourcing) Migration patterns Milk and meat Production Cold-chain Quality measures Assured market Supply Chain for final products 10 th Five year plan budgetyear

Year Implementing Agency/program Note 1971 “Cattle insurance scheme” by Small Farmer’s development agency Nationalized banks began to finance the purchase of cattle and agreed to collect premium from beneficiaries. Cover was for one year and premium was collected annually “Cattle insurance policy” under Integrated Rural Development Program Livestock and asset insurance was extended to the poor along with subsidized loans (50% subsidy). Compulsory product. Devised by General Insurance Company (GIC) and implemented through its four subsidiary agencies of GIC 1983 onwards. 1983Market agreement No subsidy and voluntary product. For non-scheme animals. Premium %. Age specified. 1999IRDA Inception of IRDA, liberalization of Indian insurance industry

2001 onwards Private players registered ICICI Lombard, IFFCO-TOKYO, HDFC, Royal Sundaram 2005 Micro-insurance regulation, 2005 Micro-Finance Institutions (MFIs), Non- Government Organizations (NGOs) and Self-Help Groups (SHGs) can act as an agent for insurance companies to increase the penetration of insurance in the rural markets “Livestock insurance scheme” implemented by State Livestock Development Boards (SLDB and State Animal Husbandry Departments Premium of the insurance is subsidized to the tune of 50%; Competition increased between public and private players- premium not to exceed 4.5% for annual policies and 12% for three year policies. Scheme is extended in 11 th Five Year Plan ( ) to cover entire country.

Identification of animal All insured animal should be suitably identified by one or more of the following methods: Ear tagging Natural identification and colour should be clearly noted in the proposal form Photograph of animal may be insisted in case of high value animals Branding with hot ironing and tattooing

Business 4 Public insurers and 16 private insurers Public insurers New India United India Oriental insurance National Insurance Private insurers Royal Sundaram ICICI Lombard Loss ratio: 40-80% (Various Insurance agencies) Premium rate: % per annum

Business Price of cattle: Rs 10,000 Premium: Rs. 400 Veterinary charges: Rs 50 + Rs 200 For claims : FOR EAR TAGGING PM & Claim settlement INSURANCE COMPANYFARMER  Send the person to identify that animal died is same  Have to bear veterinarian charges  Pay-out ratio: 1:25 animals  If no claims are settled then thinks it a loss of Rs 400 (paid as premium)

Challenges Supply related challenges: Process issues High transaction cost: Identification of the animal Assessment of cattle value Claim settlement process (fraud) and Other administrative processes Premium pricing Absence of historical data No actuarial fair pricing Product issues Limited risk covered No innovations in extending coverage (e.g. for infertility) Demand related challenges Ability and willingness to pay Lack of awareness Non-standardized risk reducing practices

Way-out Un-removable ear tag RFID- External and internal Double tagging Both ears conventional ear tag One ear conventional and other RFID Un-removable ear tags at both ears DNA finger printing Retinal and cephalic index Muzzle identification