Fasal Bima: Payout slow, insurers yet to pay Rs 6,000-crore kharif claims

June 1, 2020 1:20 AM

Even as sowing for the kharif season of 2020-21 crop year (July-June) is about to begin in a few days, settlement of crop insurance claims pertaining to the last kharif season is progressing at a tardy pace despite farmers being already hit by Covid-19.

Only 61% of the claims of Rs 15,044 crore have so far been paid by the insurers, source said.Only 61% of the claims of Rs 15,044 crore have so far been paid by the insurers, source said.

By Prabhudatta Mishra

Even as sowing for the kharif season of 2020-21 crop year (July-June) is about to begin in a few days, settlement of crop insurance claims pertaining to the last kharif season is progressing at a tardy pace despite farmers being already hit by Covid-19. Only 61% of the claims of Rs 15,044 crore have so far been paid by the insurers, source said.

Kharif harvesting is usually complete by January and the government’s stated policy is that the claims will be settled within three months.

Of course, in some states, namely Tamil Nadu, Chhattisgarh, Karnataka, Himachal Pradesh, Uttar Pradesh, Harayana and Maharashtra, insurers have cleared 84% or more of the claims made by farmers.

The claims honoured by insurance companies for kharif 2019 crop damages reported by farmers under the PM Fasal Bima Yojana (PMFBY) and Weather-Based Crop Insurance Scheme (WBCIS) were Rs 9,144 crore across the country till May 26.

Jharkhand and Karnataka would complete the compilation of data by mid-June, while it may take more time in Assam, Madhya Pradesh, Andhra Pradesh and Telangana, where farmers are yet to be paid any claims, the sources said.

In 2018-19 agriculture year, the payout was to the tune of Rs 17,833 crore – Rs 15,977 crore in kharif and Rs 1,856 crore in rabi.

As prolonged monsoon showers caused large-scale crop damages, the claims by farmers against the premium collected by the insurers have exceeded 100% in Maharashtra, Himachal Pradesh, Kerala, Uttar Pradesh and Madhya Pradesh, even as the ratio on a pan-India basis was only 65% during kharif 2019.

Four private insurance companies — ICICI Lombard, Tata AIG, Cholamandalam MS, and Shriram General Insurance — have opted out of the government’s flagship crop insurance scheme – PMFBY – for both the kharif and rabi seasons of the 2019-20 crop year, as the claims ratio in the states where they were operators in the previous year were quite high, leading to losses from the business.

“On the one hand, insurers are not enthusiastic with losses in successive seasons. At the same time, states are exiting the scheme one after the other, latest are Telangana and Jharkhand. All these developments are happening after making crop insurance voluntary and bringing in some other reforms in PMFBY,” an expert said and suggested “the Centre needs to sit with states and re-launch PMFBY after making a complete overhaul”.

Maharashtra has invited tender again for the premium due to lack of participation by insurance companies in 9 out of 10 clusters for which bids were invited this month. West Bengal, Bihar and Andhra Pradesh had earlier opted out of PMFBY while Punjab never implemented it, citing it was not suitable for 100% irrigated state.

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