Fasal Bima: Claims ratio dips to a healthy 65% in kharif 2018

Published: June 26, 2019 4:26:07 AM

The highest amount of pending claims has been reported from Maharashtra (Rs 1,312 crore), followed by Rajasthan (Rs 912 crore).

fasal bima, kharifInsurance firms have paid Rs 8,540 crore against Rs 13,471-crore claims made for the season last year, according to official data as of June 17.

By Prabhudatta Mishra

The claims ratio under the Pradhan Mantri Fasal Bima Yojana (PMFBY) and revised weather-based crop insurance scheme (RWBCIS) has declined to about 65% in kharif 2018 against 87% in the previous season, despite the country having a 9% deficient monsoon rainfall.

This suggests the insurance business in agriculture sector has been stabilising. The number of farmers enrolled under both the crop insurance schemes was, however, at same level of 3.47 crore during the last two kharif seasons.

The payout ratio (actual payment against claims made) for kharif 2018 stood at 63% even 9 months since the harvesting season began.

Insurance firms have paid Rs 8,540 crore against Rs 13,471-crore claims made for the season last year, according to official data as of June 17. The highest amount of pending claims has been reported from Maharashtra (Rs 1,312 crore), followed by Rajasthan (Rs 912 crore).

One of the major factors for delay in claims payment is non-payment of premium by both the Centre and the states. The Centre was yet to pay its share worth `3,163 crore while states were at default for about Rs 2,848 crore (until June 17).

There were about 19 lakh lower enrolment of loanee farmers during kharif 2018 from a year-ago level. However, a similar increase in the number of non-loanee farmers helped to keep the overall enrolment at same level. Maharashtra witnessed highest 21% increase in coverage of non-loanee farmers to 82.22 lakh.

The focus of political parties and state governments on loan waiver is perceived as a major factor to drag down the enrolment of farmers which was at 4.03 crore during kharif 2016, the first season after the PMFBY was launched. In the crop insurance business, PMFBY has about 90% share while the other scheme, RWBCIS, has the remaining 10%.

Also read: Fasal Bima Yojana is failing, fix it

In a matter of three years, PMFBY has become the third largest line of non-life insurance business in India. The insurers are estimated to have made a surplus of over Rs 20,000 crore in the first five crop seasons (data as of June 17, 2019). But their profit could be around Rs 13,500 crore after factoring in at least 10% (of the gross premium) expenditure on reinsurance and other administrative expenses, sources said. The expense ratio is about 10-15% of the premium collected by the firms.

Of the 12% (of sum insured) premium paid for PMFBY, farmers pay only two percentage points (kharif season) while the remainder is split equally between the Centre and the states.

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