Page 31 - Insurance Times December 2020

PERFORMANCE

OF CROP

INSURANCE

SCHEMES IN

INDIA

Introduction insurance scheme. Premium rates increased substantially

The Comprehensive Crop Insurance Scheme (CCIS) launched and as a result the claim ratios came down under MNAIS
in 1985 was the first large scale government subsidized crop as compared to CCIS and NAIS. Meanwhile, a need was felt
insurance scheme in India. Both CCIS and its immediate to move from the traditional area-yield approach to loss
successor the National Agriculture Insurance Scheme (NAIS) assessment, which is based on Crop Cutting Experiments
carried premium and claims subsidies from the government (CCEs) undertaken by state governments,to a more
and the risk was exclusively carried by public sector insurers. transparent and quicker basis of claims settlement. The
The premium rates under both these schemes were Weather Based Crop Insurance Scheme (WBCIS) was
practically fixed by the government and hence actuarial price launched on a pilot basis in 2007 to address this situation.
discovery based on actual claims experience for various Under WBCIS claim payouts were based on underlying
crops across states and districts could not take place. indices like precipitation (rainfall) instead of yield deficit as
assessed by CCEs. The Revised WBCIS (RWBCIS) continues
to be in operation till date.
It was only in 2010 that the government launched the
Modified National Agriculture Insurance Scheme (MNAIS)
that provided for payment of actuarial premium to insurers However, RWBCIS could never fully replace the area-yield
prior to the commencement of risk. This was the first based flagship schemes. The ambitious Prime Minister's
concrete effort towards introducing a market-based crop Fasal Bima Yojna (PMFBY) launched in 2016 introduced
several changes like higher number of CCEs making the
village as an insurance unit, pegging the farmer's premium
About the author contribution to maximum of 2.5% of the sum insured, equal
sharing of the remaining part of the actuarial premium
Arman Oza between state and central governments, introducing
Director technology based solutions for enrolment as well as claims
Quadrant Consultants Pvt. Ltd. settlement, opening-up the scheme for bids by all
The Insurance Times, December 2020