The core group which met in the capital on Monday under the chairmanship of Bhagat Singh, additional secretary, agriculture suggested certain norms for working out the premium to be charged to the farmers for different crops. The risk factor to certain crops in certain states will also be considered in working out the premium. It was decided to take into consideration all factors centering particular crop like groundnut cultivation is risky in Gujarat while wheat cultivation is safe in Punjab and Haryana.

The core group with consisted of representatives from Indian Banks Association (IBA), regional rural banks (RRBs), state cooperative banks, ARDBs and Insurancedivision in the Union finance ministry represented by the special secretary, B K Chaturvedi also decided that there should a certain amount of subsidy for small and marginal farmers and the proposed scheme will cover both the loanee and non-loanee farmers. The subsidy for small and marginal farmers will borne by the central and concerned state governments. The GIC has been asked to compute the amount of subsidy. The scheme will cover risks due to fire and lightning, storm, hailstorm, cyclone, typhoon, tempest, tornado, floods, inundation, drought, dry spells, pests and disease. Specific hailstorm insurance cover will also be offered on area approach basis. The exclusions are standards like losses arising out of war and nuclear risks and malicious damages.

It was decided that the premium charged will be based on `actuarial premium rates' worked out at districts level for various crops covered in consultation with the professional agencies. The actuarial premium rates once applied will remain in force for aperiod of three years. As the scheme would be based on actuarial rates of premium, efforts will also be made to obtain reinsurance cover in the global reinsurance market.