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The Pradhan Mantri Fasal Bima Yojana (PMFBY), introduced in 2016, has become the number one crop insurance scheme globally in terms of farmer applications enrolled, according to a reply in the Lok Sabha. The scheme is the third largest in the world in terms of gross premium.
Replying to a query in the House on Tuesday, Minister for Agriculture and Farmers Welfare Narendra Singh Tomar said as per data available on the National Crop Insurance Portal (NCIP), 16.54 per cent of small farmers and 67.64 per cent of marginal farmer applications have been enrolled during kharif 2020 season under PMFBY. Similarly, this percentage is 17.38 per cent and 64.54 per cent during rabi 2020-21 season.
“Overall coverage of small and marginal farmers under the scheme is about 85 per cent which corresponds approximately to their ratio in population,” the Minister said.
As per provisions of the scheme, actuarial/bidded premium rate is charged by the insurance companies. But the farmer has to pay only a maximum premium of 1.5 per cent and 2 per cent for rabi and kharif food and oilseed crops, respectively, and 5 per cent for commercial/horticultural crops.
Remaining part of the actuarial/bidded premium is shared on 50:50 basis by the Central and State governments concerned, except in the North Eastern States where it is shared in the ratio of 90:10.
Third highest ratio
A study by Kolli N Rao, Head of Agriculture Insurance and Senior Advisor to the International Reinsurance and Insurance Consultancy and Broking Services, said India has the third-highest crop insurance claim ratio globally, next only to Canada and Italy as these countries have at least one extreme climate event every year.
As far as global standards are concerned, China, the US and India account for 70 per cent global crop insurance premium collected, while in Canada and the US, the administration and operating costs of insurers are subsidised.
In the last seven years, the average crop insurance claim ratio in India was at 83 per cent while that of the Canada and Italy was 99 per cent and 98 per cent, respectively. Turkey and China had the lowest claim ratio of 55 per cent and 59 per cent, respectively.
Claim settlement ratio is the percentage of claims that an insurer settles in a year out of the total claims.
Insurance companies had collected ₹1,54,265 crore as premium in the last seven years and settled claims worth ₹1,28,418 crore, leading to a claim ratio of 83 per cent.
Since India has not experienced any wide-spread extreme event and had largely normal monsoon during this relatively short cycle of seven years under PMFBY journey, India clocked an 83 per cent claim ratio, leaving a little reserve with insurers for future events, Rao said.
Between 2016 and 2018, Tamil Nadu experienced extreme droughts, resulting in ₹8,397 crore claims against the gross premium of ₹4,085 crore and a claim ratio of over 200 per cent. Similarly, farmers in Maharashtra received compensation of about ₹4,500 crore due to heavy rains during the crop maturity or at harvest stage in 2019.
Several States such as Chhattisgarh, Haryana, Karnataka, Jharkhand, Madhya Pradesh, Odisha, Telangana had experienced over 100 per cent claim ratio in one or more years due to regional adverse weather events, he said.
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