Insurers reduce publicity to govt’s flagship crop cowl scheme PMFBY

Domestic basic insurance coverage firms are regularly lowering their publicity to the crop insurance coverage section, the Pradhan Mantri Fasal Bima Yojana (PMFBY), in a bid to stability their portfolios and reduce down losses on account of excessive claims, even because the Centre made the scheme optionally available and slashed its contribution.
Gross premium underwritten by basic insurers has fallen by 12.37 per cent to Rs 4,221 crore within the four-month interval ended July 2021 as in opposition to Rs 4,817 crore within the year-ago interval. This follows the 16.76 per cent decline in crop insurance coverage premium to Rs 19,071 crore (excluding Agriculture Insurance Corporation) within the fiscal ended March 2021 as in opposition to Rs 22,911 crore within the earlier 12 months, in response to figures accessible from General Insurance Council (GI Council).
Public sector insurance coverage corporations — significantly nation’s largest basic insurer, New India Assurance — have nearly diminished their publicity to nil within the 4 months of the present monetary 12 months. All the 4 PSU insurers — New India Assurance, United India Insurance, National Insurance and Oriental Insurance — have a mixed publicity of simply Rs 3.8 crore within the interval.
Private sector basic insurers like ICICI Lombard General Insurance and Tata AIG had exited the portfolio two years again. ICICI Lombard General Insurance had mentioned it’s exiting within the wake of losses and excessive reinsurance prices.
Launched in February 2016, PMFBY witnessed enormous claims of over 100 per cent within the first few years, resulting in losses for insurers. Even GIC Re, which was earlier bullish on the portfolio, has reduce down its publicity drastically after it was hit with heavy losses within the final two years. In the June quarter, the reinsurer slashed its crop portfolio by 23 per cent to year-on-year to Rs 5,312 crore however has achieved profitability within the portfolio.
In February 2020, the federal government revamped PMFBY and the Restructured Weather Based Crop Insurance Scheme (RWBCIS) to handle present challenges in implementation of crop insurance coverage schemes. In a significant step, enrolment within the two schemes was made voluntary for all farmers, together with these with present crop loans. When PMFBY was launched, it was made obligatory for all farmers with crop loans to enrol for insurance coverage cowl beneath the scheme.
“The Centre has almost halved its contribution to its own flagship crop insurance schemes, slashing its share of the premium subsidy from the current 50 per cent to just 25 per cent in irrigated areas and 30 per cent for unirrigated areas from the kharif season of 2020,” mentioned an official of an insurance coverage agency. The discount in crop insurance coverage publicity has come regardless of losses suffered by farmers in in floods and different pure calamities within the final two years.

According to figures accessible from the GI Council, Agriculture Insurance Corporation (AIC) accounted for nearly the entire premium at Rs 2,063 crore within the 4 months, up from Rs 1,728 crore a 12 months in the past. “Crop insurance business seems to have shifted from four PSU insurers to AIC,” mentioned an insurance coverage sector supply.
Among non-public sector gamers, Reliance General Insurance has elevated its publicity to Rs 624 crore from Rs 431 crore within the four-month interval ended July 2021. Bajaj Allianz reduce all the way down to Rs 924 crore from Rs 1,212 crore and ICICI Lombard to Rs 0.04 crore from Rs 28.71 crore.
While farmer enrolment has diminished, one more reason for the drop in farmer enrolment is reportedly the delay in pay-outs. Yet one more reason that may be attributed to decrease crop insurance coverage is the mismatch between digital information and land possession claims made by the involved farmers (this mismatch prevents farmers from accessible crop insurance coverage), mentioned a Care Rating report.