Cannot display the premium as a receivable beyond 270 days
The insurance regulator, the Insurance Regulatory and Development Authority (IRDA) has tightened standards for the crop insurance scheme.
It also has implications for many listed entities.
In a nutshell, up to 20 percent of the total premium, which general insurance companies collectively collect, could be subject to uncertainty due to these new orders and regulations from the insurance regulator.
What the IRDA said is that general insurance companies cannot show claims on crop insurance premiums if they are not collected or received within 270 days, which means these General insurance companies will have to reduce any outstanding claims on crop insurance premiums from various central and state governments if they are not received within 270 days.
Now, just to put a bit of context, crop insurance is a subsidized government program where 50 percent of the premium is paid by the farmer or beneficiary and the remaining 50 percent is shared between the central government and the state government.
Now that 50 percent with central government and state government pay together, that’s the amount that’s at issue and insurance companies have been asked to collect within 270 days.
Watch the accompanying video of CNBC-TV18’s Yash Jain for more details.