Page 36 - Insurance Times July 2023

coverage to farmers on individual approach basis. Later it Overall, the PMFBY has been instrumental in providing much-
was changed to area approach in 1979 as Pilot Crop Insurance needed financial security to farmers in India. The scheme has
Scheme. In 1985, the Comprehensive Crop Insurance Scheme covered millions of farmers across the country and has been
(CCIS) was launched, which aimed to provide additional praised for its transparency and effectiveness. However,
coverage to farmers against pests and disease risks. It was concerns have been raised about the scheme's implementation,
further expanded to be more comprehensive and was known including delays in claims settlement and the exclusion of some
as National Agricultural Insurance Scheme (NAIS) in 1999. It farmers from the scheme's benefits. Nevertheless, the
was implemented by most of States for more than a decade government is continuously working to improve the scheme's
till 2010. To make the scheme more effective and efficient, effectiveness and ensure that farmers can access affordable
the Modified National Agricultural Insurance Scheme (MNAIS) and comprehensive insurance coverage.
has been introduced in 2010 to address the shortcomings of
the NAIS. The MNAIS aimed to provide comprehensive The major attraction of the PMFBY was the assessment of
insurance coverage to farmers against all types of risks. losses (of certain perils) on an individual basis, whenever
required. And with the passage of time, there is a significant
In 2016, the Government of India introduced the Pradhan increase in the number of claim intimations from the farmers
Mantri Fasal Bima Yojana (PMFBY), the aim of which was to in the categories of Localized Calamity and Post Harvest claims.
provide affordable crop insurance coverage to farmers. The surge in these loss intimations is a sign that the farmers'
Whereas this scheme was also on "Area Approach" basis, community is getting educated day-by-day about the scheme
herein the coverage has been introduced to cover the and its benefits to them. The losses due to changing weather
individual farmers' loss also, though only for limited perils like pattern are very well covered by this aspect of the scheme.
inundation and hailstorms. This has been a turning point for
crop insurance in the country. Going forward, if any scheme (insurance or otherwise) is to
be improved and free from all biases, it has to enhance the
In the last FY 2022-23, the total premium of the General usage of technology in it, without fail. The PMFBY scheme
Insurance Industry has been INR 2.5 Lac Crore and Crop also introduced new technologies, such as remote sensing
Insurance premium touched INR 35,000 Crores; i.e. 14% of and drones, to assess crop damage accurately. The vision of
the General Insurance Industry. The current focus of the the Agriculture Ministry is to assess more than 50% of the
Department of Finance and IRDAI to increase the insurance cropped area by 2023 through technology, without the
penetration manifold in the country, rural insurance certainly intervention of ground-level teams.
has to play an important role, given the fact that the Indian
Further, with the introduction of Yes-Tech governed by the
economy is an agrarian economy.
MNCFC in Maharashtra state, the usage of technology is being
introduced in a planned and phased manner. Many models
Under the PMFBY scheme, the premium rates are also the
viz. semi-physical models, AI models, crop simulation models,
actuarial premium rates, wherein the insurers bid in the
and ensembled models are being used for the same. Initially,
States' tenders. The farmers are required to pay a nominal
10% weightage is given to the Yes-Tech in the yield
premium of 2% of the sum insured for Kharif crops, 1.5% for
estimation, which will gradually be increased.
Rabi crops, and 5% for commercial & horticultural crops. The
remaining amount of the premium is paid by the State and
Overall, crop insurance has played a crucial role in supporting
Central Governments in their given proportions as subsidy.
Indian farmers against crop losses and other related risks.
The government has taken various measures to improve the
Such a huge scheme, with so many agricultural diversities in
effectiveness of these schemes and ensure that farmers can
the country to be covered, huge number of people working
access affordable and comprehensive insurance coverage.
for its success, the job of the Department of Agriculture is
commendable in terms of the spread & control over the Where the government-sponsored/subsidised scheme PMFBY,
scheme in differently led states, the robust software system covering the shortfall in yield, is an area-approach scheme and
NCIP to cater the needs of enrolment of farmers in each majorly based upon the yield estimation; the insurers are coming
season through Banks, CSC, intermediaries and even directly up with new solutions to cover the left-out crops, majorly in
from farmers. The recent development of having all the claims horticulture. There are many avenues for the insurers to cover
to be disbursed through the NCIP is a great achievement of on a parametric basis. Even for parameters, there is a shift
the Department. being implemented by the insurers i.e. from the traditional

32 July 2023 The Insurance Times