Private firms reap gold from PM Modi's crop insurance scheme

While insurance companies earned a gross premium of Rs 22,180 crore, they paid out only about Rs 12,949 crore as claims to the farmers, according to the Ministry of Agriculture’s data for last year.

Published: 27th May 2018 02:24 AM  |   Last Updated: 27th May 2018 07:59 AM   |  A+A-

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Express News Service

NEW DELHI:  Insurance companies have struck gold with the Pradhan Mantri Fasal Bima Yojana (PMFBY) — the ambitious crop insurance scheme meant to help the distressed farmers in the country.
While insurance companies earned a gross premium of Rs 22,180 crore, they paid out only about Rs 12,949 crore as claims to the farmers, according to the Ministry of Agriculture’s data for last year.

This comes amidst nationwide reports indicating inordinate delays in farmers getting claims or getting paltry claims for their crop loss. Only recently, there were reports from Raigarh district in Chattisgarh of farmers getting claims as low as Rs 5 to Rs 18 as crop insurance claims. Similar reports also came in from some other parts of the country.

Launched in April  2016, the PMFBY provides comprehensive crop insurance from pre-sowing to post harvest against non-preventable natural risks at extremely low maximum premium rate of 2 per cent for Kharif crops, 1.5 per cent for Rabi Crop and 5 per cent payable by farmers for annual commercial or horticultural crops. The balance of actuarial premium is shared by the Central and state governments.

Data from the Agriculture Ministry says that about 1.20 crore farmers benefitted from the PMFBY scheme in 2016-17 and a total of 12,949 crore claims were paid to the farmers by the insurance firms.

However, the insurance firms received total Rs 22,180 crore as gross premium, including Rs 4,383 crore from farmers and Rs 17,796 crore from states and Centre as a subsidy.

Agriculture expert Devinder Sharma said the scheme has many flaws, and it appears to have been deliberately designed to benefit insurance companies. “You can see from the data that how much amount has gone into the pocket of insurance companies. In the last year itself, they got more than `9,000 crore. In fact, there is a problem in the design and it is basically to help the private insurance companies,  and the government seems totally ignorant of this,” Sharma said.

“Nowhere in the world can private companies bid for premiums in the crop insurance scheme. It is only in India that these companies are selected through bids. Elsewhere, only government fixes a premium,” he added.

Both public, as well as private sector companies, are empanelled to implement the crop insurance schemes in states.Private companies like ICICI-Lombard General Insurance, HDFC-ERGO General Insurance, IFFCO-Tokio General Insurance Company Limited, Cholamandalam MS General Insurance Company Limited, Tata-AIG General Insurance Company Limited, Future Generali India Insurance Company Limited, Bajaj Allianz General Insurance Company Limited and few others are on the list.

Officials said the government has tried to provide a more realistic assessment of losses. The unit area of insurance has been reduced from district level to village or panchayat level for major crops and to individual farm levels for localised risks of hailstorms, landslides and inundation.

While settlement of claims is done on the basis of yield loss assessment at the end of season, some immediate relief is also provided to insured farmers in case of adverse seasonal conditions during the crop season.

Officials said that keeping in view the delay in settlement of claims under the schemes, activity-wise strict timelines were prescribed under PMFBY. Further, the scheme is technology driven and provisions have been made for use of Remote Sensing Technology, smartphones, mobile apps and drones for quick estimation of crop losses.

The Centre said it is pushing states and other stakeholders to adopt these technology features at the earliest so that timely claim settlement is ensured, and that the time taken to settle claims has been reduced to an average of within two months after receipt of yield data from state governments due to these measures.

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