Page 27 - Insurance Times July 2022

implemented since the year 2009- 10 in the selected areas 2020-21 crop year from the previous year as there were no
of Andhra Pradesh, Goa, Karnataka, Kerala, Maharashtra, major crop losses, according to official data. However, much
Orissa and Tamil Nadu. The scheme has also been continued of the crop insurance claims reported for 2020-21 and 2019-
during 2018-19 and 2019-20. Since inception of the scheme, 20 crop years have been cleared by the government. Crop
57.25 lakh palms of 1.24 lakh growers for a sum insured of insurance claims stood at Rs 27,398 crore in the 2019-20 crop
Rs. 506 crore have been covered. Against premium of Rs. year (July-June). About 445 lakh hectares of farm land was
3.26 crore claims of Rs. 4.40 crore have been paid to about insured by 612 lakh farmers under the PMFBY with a total
0.09 lakh farmers. sum insured amount of1 Rs,93,767 crore during 2020-21.

Coverage of Women Farmers under However, total claims reported were of Rs 9,570 crore for
2020-21. Out of which, claims reported from the Kharif
PMFBY
season were Rs 6,779 crore, while from Rabi season Rs 2,792
All farmers whether sharecroppers, tenant farmers crore. The claims at Rs 9,570 crore for 2020-21 were
including women farmers growing crops in the areas notified significantly lower as there were no major losses unlike
by the concerned State/UT Government are eligible for previous year. During the 2019-20 crop year, about 501 lakh
coverage under the scheme and can insure themselves as hectare was insured by 613 lakh farmers under the PMFBY
per provisions of the scheme. The coverage under the with a total sum of Rs 2,19,226 crore. The claims reported
scheme is subject to land records and tenancy contract. from Kharif season remained higher at Rs 21,496 crore, while
Further, the Scheme is demand driven. Since, the scheme from Rabi season at Rs 5,902 crore of the 2019-20 crop year.
has been made voluntary for participation, all farmers Maximum crop insurance claims were reported from
including woman farmers are eligible to enroll under the Maharashtra at Rs 6,757 crore, followed by Madhya Pradesh
scheme. There are no specific extra benefits/provisions for at Rs 5,992 crore and Rajasthan at Rs 4,921 crore during
women farmers under the scheme. However, the 2020-21. About Rs 6,845 crore crop insurance claims of
Government is bound to pay its share in premium subsidy farmers for 2020-21 has also been cleared The outstanding
for all the farmers including women who take up crop claims of Rs 1,200 crore will be cleared soon.
insurance. The coverage of women farmers under PMFBY
has remained consistent since inception of the scheme. Insurer's point of view
In the initial years of the scheme, the pattern was reverse
Government agencies made losses - claims paid by insurance companies were less than the
Only 10.86 per cent of the five government enterprises gross premium. The problem is aggravated when most of
empanelled for the scheme made profits. The five the states which are part of the scheme are loss making.
government corporations control 50 per cent of the crop Few of the states are loss making and in other states that
insurance market. Agriculture Insurance Company of India have not made claims frequently, the calamity for when they
(AIC) Ltd has a majority of this share. made, was severe. This means the incidence ratio is low but
calamity is high. Hence, insurers like ICICI, Tata,
Other government-owned enterprises under the scheme are Cholamandlam, Shriram have opted out. The government
National Insurance Company Ltd, Oriental Insurance has made changes to the scheme twice, with an aim to
Company Ltd, United India Insurance Company Ltd and New make it more efficient. It has recently also set up two
India Assurance Company Ltd. Only AIC has a competitive separate panels to suggest suitable working models for
advantage in this industry among the five. In four years, the PMFBY, following the withdrawal of seven states from the
company earned Rs 32,429.24 crore in premiums and paid scheme.
Rs 26,874.6 crore in claim - a profit of 17.12 per cent. New
India Assurance Company got Rs 4,660.31 crore in premiums One of the panels will conduct a cost-benefit analysis of
and paid Rs 5,145.22 crore; Oriental Insurance collected a different insurance models, especially the cup and cap
premium of Rs 3,893.16 crore and paid claims worth Rs model, now also known as the Beed model. In Beed, the
4,305.66 crore; National Insurance paid a total of Rs insurance company provides a cover of 110 per cent of the
2,514.77 crore in premiums against a total of Rs 2,574.34 gross premium and if the claims exceed the cover, the state
crore in premiums. government would pay the bridge amount. If the claims are
less than the premium collected, the insurance company
There has been more than 60% decline in the crop insurance would keep 20 per cent of the amount as handling charges
claims of farmers at Rs 9,570 crore under the PMFBY for the and reimburse the rest to the state government.

The Insurance Times, July 2022 27