Page 24 - Life Insurance Today January 2018

Higher coverage,

premiums to inflate

crop insurance

subsidy

T he 2017-18 subsidy bill for the around five per cent, said insurers. ments (CCE) were not properly con-

states and the Centre due to
ducted.
“There has been a rise in premium in
the Pradhan Mantri Fasal
Bima Yojna (PMFBY) is set to western states. In southern states, CCE data at harvest helps assess yield
too, there has been a moderate rise in
increase 10-15 per cent as the scheme premium,” said an official from a pri- loss. But collecting the data requires
enters the second year. vate sector insurance firm. substantial manpower. At present,
state governments have the responsi-
The farmers’ coverage is expected to Key Statistics 2016-17 bility to conduct the experiments. In
increase by 10-15 per cent. In several some cases, the experiments were not
states, insurers have raised premium No. of farmers covered: 57 million conducted on the date intimated to
quotations by five-seven per cent. (Rs. cr) the insurers. In other states, data pre-
Total sum insured 2,02,551 sented by the state government did
In 2016-17, the central government Total premium 22,337 not match ground realities.
had shelled out around Rs 8,867 crore collection
and states Rs 9,056 crore to subsidise For example, in Gujarat, despite a
Premium paid by 4,411
the PMFBY, which gives farmers crop farmers bumper production of groundnut, the
insurance at low premiums and higher claim ratio determined by the state
Premium paid by 8,867
coverage. government has been as high as 200
central govt
per cent. In Rajasthan, crop cutting
Premium paid by 9,056 experiments were affected last year
“This year, there has been a 10-15 per state govts due to a strike by government ap-
cent increase in coverage area,” said Total claims 13,500 pointed accountants. In Tamil Nadu,
an official of a public sector insurance *All figures are approximate the insurers had one of the highest
firm. “In addition, in some western Source: Agriculture insurance com- claim ratios, exceeding 300 per cent,
states, the premium has also in- panies due to one of the worst droughts in
creased by about 10-15 per cent on the past 140 years.
the basis of last year’s claim experi-
ence.” Premium collection in 2016-17 was Rs The PMFBY is based on actuarial calcu-
22,337 crore and claims were about lations and rates are based on risk per-
This year, insurers have mostly raised Rs 13,500 crore. The sum assured was ception. Thus, premiums differ, based
premium quotations by around 10 per about Rs 2,02,551 crore, covering on crops and regions. However, a
cent in some western states, such as nearly 57.10 million farmers and farmer pays only a flat two per cent
Gujarat and Rajasthan. In states such about 55.50 million hectares. premium, the rest is provided by the
as Karnataka and Tamil Nadu, the in- central and state governments. On an
crease has been around five-seven per Last year, data discrepancy had led to average, the premium comes to around
cent. In eastern states, where the in- disputes about claim settlement in 12 per cent, with the state and central
surers had better claim ratio last year, several states. According to insurers in governments bearing five per cent
the premium has come down by several states, crop cutting experi- each. (Source : Business Standard)

24 January 2018 Life Insurance Today

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