The Centre has claimed that coverage under Pradhan Mantri Fasal Bima Yojana (PMFBY) has increased to 30 per cent of the gross cropped area (GCA) from 23 per cent in 2015-16 under the earlier schemes. The Ministry of Agriculture and Farmers Welfare told the Rajya Sabha last week that it was incorrect to say that private insurance companies had made windfall gains under the scheme.
The Ministry added that the rise in coverage was because of the improved features of the scheme. “Participation of non-loanee farmers, for whom the scheme is voluntary, have also increased from 5 per cent under erstwhile schemes to 42 per cent (Kharif 2019) under PMFBY, showing the voluntary acceptability of the scheme,” the Ministry added.
Reinsurance costs
The difference between premium collected and claims paid is not the margin/profit for the insurance companies, the Ministry said. “The cost of reinsurance and administrative cost totalling 10 to 12 per cent of gross premium also have to be borne by the insurance companies. Further, out of the total crop insurance business under the scheme, more than 50 per cent is shared by the five public sector insurance companies, including Agriculture Insurance Company of India Ltd.”
Under the provisions of the scheme, premium from farmers along with central and State government share in premium subsidy is paid to the concerned insurance company for acceptance of risk and payment of claims as per the provision of the scheme. Insurers save premium in good seasons/years and pay high claims, if any, in bad years from the savings made in the good years, the Ministry added.
Claim ratio
The Ministry said that in spite of overall good monsoon during the first three years of the implementation of PMFBY, the claim ratio during 2016-17, 2017-18 and 2018-19 was about 77 per cent, 86 per cent and 80 per cent (provisional) respectively. Overall claim ratio for the three years combined (2016-17, 2017-18 and 2018-19) comes to about 81 per cent.
But the farmers in most affected areas/States received higher claims and the claim ratio was higher in Kerala (209%) and Karnataka (136%) during Kharif 2016, Tamil Nadu (298%) and Andhra Pradesh (179%) during Rabi 2016-17.
During Kharif 2017, the higher claim ratio was in Chhattisgarh (452%), Haryana (270%), Madhya Pradesh (161%) and Odisha (217%). During Rabi 2017-18 high claim ratio States were Odisha (226%), Tamil Nadu (148%) and Chhattisgarh (109%). Though complete data for Kharif 2018 season is not available, high claims ratio has been reported in States of Haryana (140%), Uttarakhand (115%) and Chhattisgarh (124%), the Ministry informed the House.
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