Page 23 - Insurance Times July 2022

the top 10 general insurers that include three large PSUs, (marked FY19 K in the graph) but that is only a part of the
New India Assurance is the only company which has the FY20 cropping seasons (Rabi numbers not available).
distinct achievement of positive premium growth,
profitability and higher market share by expanding its core
business organically in FY21. Led by Star Health & Allied
Insurance, all six stand health insurers - at Rs 15,720 crore
- have together grown 11 per cent y-o-y in FY21.

Crop Insurance in India

Crop insurance is one of the key elements to stabilize farmers
by compensating for crop losses arising out of drought, flood
and other causes. In 2016, India overhauled crop insurance
to expand its coverage of farmers and farm areas. Initially,
it did expand the coverage but since then it has seen a
downward slide, one of the key reasons for this being visible
profiteering by insurance companies. 13 private companies
generated a surplus of Rs 2,725 crore but the five PSU ones
recorded a deficit of Rs 3,484 crore in 2017-18. Net effect:
The success of PMFBY depends on the accuracy of loss
a deficit of Rs 759 crore over the premium received. This is
assessment, in this case, the CCEs. Ideally under CCE, a
easy to understand. If crop loss is less, insurers make a
team, consisting of government officials and the local
surplus, and if it is more, they report a deficit.
insurance company, selects random fields in an insurance
unit (the states notify village/village panchayat/ mandal/
Both private and public insurers are also reinsured with
taluka/district as an insurance unit). An analysis of data
public sector insurer General Insurance Company (GIC),
compiled from PMFBY's dashboard and from government
which underwrites such losses. However, there was a big
replies in Parliament shows that since 2016, there has been
brouhaha over this (huge savings from the premium) and
a 62 per cent decrease in farmers covered under crop
farmers and some state governments withdrew from it,
insurance during kharif season to 15.1 million in 2021, and
reducing the coverage in subsequent years. Country's
46 per cent decrease during rabi to 9.2 million in 2021.
agricultural sector brightened up the GDP growth of the
country in another year battered by the pandemic, which
Area insured has also reduced - 57 per cent under kharif and
caused a significant decline in India's economic activity. In
22 per cent under rabi. While there has been a decrease in
the last fiscal year, while economic activity in the country
suffered, agricultural sector posted a robust growth of applications from non-loanee farmers, for whom PMFBY was
optional from the start, many loanee farmers tell Down To
3.4%. The pandemic has a silver, or rather, green lining in
the form of a thriving agricultural sector. Earth (DTE) that they pay the premium as they are not
aware the scheme was no longer mandatory. Keeping in
That is because the premium is paid by farmers and the view the risks involved in agriculture and to insure the
central and state governments. That the new insurance farming community against various risks, the Ministry of
schemes of PMFBY and RWBCIS expanded the coverage and Agriculture & Farmers Welfare introduced a crop insurance
brought a higher number of farmers and farms is not in scheme in 1985 and thereafter brought improvements in the
doubt. The cause of worry is the subsequent fall in coverage. erstwhile scheme(s) from time to time based on the
The biggest challenge for farmers continues to remain the experience gained and views of the stakeholders, States,
unusual way crop insurance works in India: Farmers are not farming community etc.
provided with insurance policy documents or receipts of
premiums from banks or insurance companies that would The insurance schemes currently under implementation are
tell them who their insurer is or received their premium the Pradhan Mantri Fasal Bima Yojana (PMFBY) and the
(deducted at the time of taking loans). Restructured Weather Based Crop Insurance Scheme
(RWBCIS). The total funds released by the Government of
The following graph maps the number of farmers and farm India during last 5 years under various schemes for crop
areas in FY18 and FY19. The fall is reversed for FY19 Kharif insurance are as under:

The Insurance Times, July 2022 23