Public sector reinsurance company General Insurance Corporation, which transferred its Rs 350-crore (Rs 3.5 billion) agricultural insurance portfolio to the Agricultural Insurance Corporation of India, plans to enter the agricultural reinsurance business in a big way.

"After having transferred our agricultural crop insurance portfolio to the company floated by GIC and its subsidiaries, along with National Bank for Agriculture and Rural Development, it will be logical for us to enter the agricultural reinsurance sector," explained P B Ramanujam, managing director, GIC.

"GIC handled crop insurance on behalf of the government for a reasonable period of time. This has given us the expertise and the feel of the Indian agricultural insurance business, equipping us to manage agricultural crop reinsurance," he added.

Although AIC is in the process of designing its organisational and functional structure, it plans to extend insurance cover to cattle, orchards, sericulture and other crop related activities.

A dedicated crop insurance company will help the crop insurance portfolio grow at a much faster pace over time, providing more reinsurance business to GIC, said officials from the reinsurance company.

GIC's product portfolio which was transferred to AIC included a National Agricultural Insurance Scheme which provided cover to farmers in the form of crop insurance. Till now, GIC was the only company that provided agriculture insurance.

AIC is expected to administer crop and seed insurance schemes of the government from the ensuing kharif season. So far GIC has been the implementing agency for the national agricultural insurance scheme and the seed insurance scheme of the government.

This year however, GIC is expected to book looses on account of its crop insurance business because India was hit by drought and floods. In contrast GIC's National Agricultural Insurance Scheme provided for a Rs 100 crore (Rs 1 billion) profit last year.