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With a large number of States exiting the government’s flagship crop insurance scheme, the Agriculture Insurance Company (AIC) of India is now understood to be in discussions with many of them on their requirements and how to bring them onboard them again.
“Necessity is the mother of invention. We have to find out why States are going out and so AIC is trying to come back to the drawing board and work out innovative solutions,” said a senior government official.
Some of these solutions are within the ambit of the Pradhan Mantri Fasal Bima Yojana, and others are outside the framework.
“AIC is trying to do as much as possible within the PMFBY framework, but if it doesn’t happen, then it is also willing to offer alternative solution outside the framework,” the official noted.
It has already worked out alternatives for States, including West Bengal, Maharasthra and Madhya Pradesh, and is also in talks with others such as Tamil Nadu.
“AIC is trying to address requirements of States, but it is a matter of time. We need to engage with them, and with travel restrictions now eased, discussions with more States will follow through,” the official noted.
Satellite-based solution
For instance, for West Bengal, AIC has rolled out a satellite-based remote sensing insurance solution.
“This is going on quite well but is outside the framework of PMFBY,” said the government official.
Under the solution, West Bengal is using ISRO’s data collection software to assess crop damage and make faster claim payouts.
In Maharashtra and Madhya Pradesh, AIC uses the cupping and capping mechanism, where in for every year taking kharif and rabi together, the premium would be set at an actuarial rate with some discount. The loss ratio is also set at 110 per cent.
Discussions with Tamil Nadu are also at an advanced stage, where the AIC is working out another model based on the State’s requirements.
Many States, including Andhra Pradesh, Telangana, Jharkhand and Gujarat, have decided not to participate in PMFBY this year, citing a range of issues such as high premium.
This was also reflected in recent insurance data. Gross direct premium for Agricultural Insurance Corporation of India de-grew by 19.3 per cent in the month of September compared to a year ago.
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