Page 39 - Insurance Times September 2021

the states paid Rs 27,075 crore as premium subsidy. It is time land will be completely prohibited. Insurers used to complain
the government launched a comprehensive evaluation of of the high claim ratio under the crop insurance scheme in
the scheme which should be concurrent with this year's the initial years after its 2016 launch; now, state after state
kharif and rabi crops. This can enable the Centre and the is quitting the scheme, as they find it difficult to foot the
states to decide the way forward. rising premium bill. A perceived tendency among insurers
to admit less of farmers' claims and the delays in settlement
Recently, the government took a good decision to engage of claims also seem to have prompted some states to
12 organizations to conduct pilot studies in kharif and rabi develop cold feet about the government's flagship scheme,
2019-20 for gram panchayat level crop yield estimation Pradhan Mantri Fasal Bima Yojana (PMFBY).
using remote sensing, artificial intelligence based softwares,
drones, mobile applications and other technologies. The states' share of premium jumped to 44% in FY20 from
International Food Policy Research Institute (IFPRI), 41% in FY17 under the PMFBY and Weather Based Crop
International Crops Research Institute for the Semi-Arid Insurance Scheme (WBCIS) while the Centre's share
Tropics (ICRISAT), Gokhale Institute of Politics and Economics increased to 42% from 40% during this period. The claims
and Trinity League India are among those who have to premium ratio, which was over 90% in two previous
submitted detailed technical reports to MNCFC. These consecutive seasons, dropped to a low of 65% during kharif
reports suggest that accuracy up to 85-90% can be achieved 2019 (as on June 30, 2020), even though there was 52%
in assessment of crop yield for rice & wheat. above normal monsoon rains in September last year that
deluged about 6% (nearly 64 lakh hectare) of the season's
This can reduce dependence on crop cutting experiments. sown area. Under PMFBY, farmers' premium is fixed at 1.5%
There is a need to integrate use of technology for assessment of sum insured for rabi crops and 2% for kharif while it is 5%
of yield. This can shorten the time taken by CCEs which has for cash crops. The balance premium is split equally between
been a major cause of delay in settlement of claims. . This the Centre and states.
year, the State government may have to shell out up to
Rs.150 crore so that farmers are not taxed in any way. Till
now, after giving allowance for farmers' share of 2%
generally, the Union and State governments shared the
premium amount equally. The sharp decline in claims to
premium ratio in kharif 2019 season also indicates
reluctance of the insurers to accept the farmers' claims.

Crop Insurance in USA:
Crop insurance helps make America's farmers and ranchers
world leaders in agriculture, allowing them to stay
competitive and be more innovative. It also helps them
sleep better at night knowing that, should the unexpected
happen, they will have the financial security to stay in
business and go on to plant the next season. Crop insurance
is a key component to the tremendous success of country's
Rising cost of Crop Insurance: agricultural economy. Here are twelve reasons why crop
insurance is an essential business tool for America's
In many states, affluent farmers have already been reaping
the benefits of collaboration with the corporate sector. This agricultural farmers and ranchers.
law will help small farmers derive similar gains. They will 1. Farmers Receive Individualized Risk Management
have the freedom to withdraw from this agreement at any Solutions
point without penalty, while sale, lease and mortgage of the 2. Farmers Can Use Crop Insurance as Collateral for Loans

The Insurance Times, September 2021 39