Page 40 - Insurance Times September 2021

3. Farmers are Involved in, and Take Responsibility for, Risk insurance for the Kharif 2019 season as on June 30 and the
Management Choices new crop year began on July 1. What is disconcerting the
4. Farmers Can Use Crop Insurance to Improve their Pre- farmers is that they are already under pressure from the
Harvest Marketing Plans authorities to opt for crop insurance for the forthcoming
season despite the failure to honour last year's claims due
5. Farmers Receive Crop Insurance Indemnities in the
to them. Farmers availing institutional finance are forced
Timeliest Way to avail the PMFBY as the loan component is linked to crop
6. Farmers Do Not Receive Unnecessarily Excessive insurance and there is no escape.
Payments
7. Farmer Indemnities are not Capped by Arbitrary But when the crops fail, neither do the banks offer them
Payment Limits relief by waiving off interest nor does the insurance company
pay them in a time-bound manner. Agriculture is labour
8. Farmers Share in the Program Cost
intensive but this year farmers are averse to hiring workers
9. Farmers Benefit from the Efficiencies and Service of the from other villages and regions due to fear of the pandemic.
Private Sector Delivery System The impact of low output due to lower crop coverage area
10. Crop Insurance is Comprehensive and Program Features - will be felt during the harvest season. The economic slump
can be Adjusted Quickly and its impact on the reinsurance market have also marred
the scheme. The commission that insurance companies
11. Crop Insurance Has Already Contributed to Deficit
receive when they reinsure the risk cover has gone down
Reduction
from 10 per cent to just 3 per cent in the past five years.
12. Crop Insurance Has Flexibility to Help Meet World Trade The commission amount itself runs into crores of rupees and
Organization Disciplines this dip has impacted the companies. The losing interest of
private players can seriously weaken the scheme. It is true,
Effective Kharif 2020, the Centre has decided that it will foot in India; Crop insurance is both obnoxious and indispensable.
the PMFBY subsidy bill to the extent of its formulaic share
so long as gross premium level is up to 30% of the sum References:
assured in non-irrigated areas and 25% in irrigated areas. 1. https://www.financialexpress.com/money/insurance/
The onus will be on states if they want to implement the crop-insurance-rising-costs
scheme even if insurers quote any premium above 25-30%. 2. https://economictimes.indiatimes.com/news/economy/
This has put further burden on states, who were already agriculture/view
worried over the cost of running the schemes. The Centre
3. https://www.air-worldwide.com/Publications/AIR-
has recently written to state governments urging them to Currents/2019/Current-Crop-Risk
invoke the penalty clause on insurance companies that have
defaulted on settling the claims made by farmers under 4. https://dare2compete.com/i/insurance-5960
PMFBY. 5. https://www.financialexpress.com/money/insurance/
fasal-bima-yojana-fewer-claims

The move followed reports that insurers had not cleared as 6. IRDAI Annual Report 2019-20
much as a third of the amounts claimed by farmers as crop 7. Newspapers & Journals

India puts checks in place for LIC, foreign holding may
be capped at 20%

The government may limit overseas investment in state-owned Life Insurance Corp. (LIC) of India at 20%, at par with
that for public sector banks.
The country’s biggest life insurer is expected to make its initial public offer (IPO) later this year. Expected to be the
biggest ever in the Indian market, it’s pegged at about Rs 1 lakh crore. The LIC Act, which governs the insurer, does
not mention foreign investment and also limits any shareholder other than the central government to a maximum 5%
stake.

40 The Insurance Times, September 2021