Time they took cover

The losses suffered by farmers in Maharashtra and Madhya Pradesh in last month’s hailstorm could have been mitigated had their crops been insured. However, large tracts of land in the two states remain uninsured. Many farmers are not aware that they can avail themselves of insurance. Others simply choose not to take it, believing there will be no unseasonal weather and that the government will bail them out in case there is a drought.

For instance, Namdeo Ghadge of Balamthakli village in Maharashtra’s Ahmednagar district did not insure his crops thinking the weather would be normal. However, the 40-year-old farmer had to watch as his wheat and jowar crop was wiped out by the hailstorm. Now, he is counting on the government to provide compensation.

While the economic losses are huge — estimated to be about ₹11,000 crore — general insurance companies expect an overall claim payout of only about ₹200 crore.

In contrast, after Cyclone Phailin hit Odisha and Andhra Pradesh last year, insurers faced much higher claims of around ₹1,000 crore as a significant part of the agricultural land was insured. Since these areas are prone to heavy flooding and cyclones, farmers tend to insure their crops.

Gradual spread State-owned Agricultural Insurance Company of India (AIC) is the largest crop insurance company, covering over 24 million farmers. It has settled claims worth nearly ₹27,000 crore in the last ten years. In recent years, nine private general insurance companies have also started offering crop insurance.

In 2012-13, AIC settled claims to the tune of ₹560 crore in Maharashtra, with many areas hit by a drought, said an official. However, as many farmers did not opt for cover due to a very good crop in the kharif season, the total sum insured by AIC in the state is much lower this year, at ₹267 crore.

AIC has received claims from 5000 individual farmers in Maharashtra. It is also assessing the claims of 258,000 farmers covered under its schemes through the state government.

K Gopinath, Head, Rural & Cooperative Marketing, IFFCO Tokio General Insurance, says the company has provided weather-based crop insurance in Maharashtra’s Pune and Yavatmal districts. The insurer expects substantial losses in covers for crops such as guava and pomegranate.

“Currently, the number of farmers covered under these schemes is very low. The exact claim can be assessed only after receipt of certified weather data, and expiry of the policy,” says Gopinath.

Industry officials say that most small farmers, who own less than 2 hectares of land (they constitute the majority), do not opt for insurance as they are unaware of it. Others do not take it as they do not have enough money to pay the subsidised premium.

Farmers who take crop loans opt for insurance as this makes it easier for them to secure a loan.

Interestingly, while farmers from most states have to compulsorily take crop insurance when they take a crop loan, it is voluntary in Maharashtra. “Since it is voluntary, if they have a good crop in the kharif season, then even farmers with large land holdings don’t see the benefit in insurance. Also, the claims take time to be paid since this is done after assessment by the state government,” said a senior AIC official.

A senior official from insurance regulator IRDA said that sometimes claims are not settled even after the next planting season has begun. “The huge delay is a concern. We are working with the India Meteorological Department on using technology to cut the time taken for assessment. This will be implemented shortly in all crop insurance schemes,” he said.

Crop insurance schemes The Central Government has launched a National Crop Insurance Programme, which consists of two major schemes: Modified National Agricultural Insurance Scheme and Weather Based Crop Insurance Scheme.

Under the modified scheme, claims are settled on the basis of yield assessed by the government. It covers localised events such as hailstorms and landslides. “The government submits the yield data by July. But we have asked for it earlier so we can settle claims quickly,” said an AIC official.

Weather based crop insurance is an index based scheme that covers deviations in measurable weather parameters such as rainfall, temperature, humidity and wind speed.

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