New Delhi: According to the annual report of Insurance Regulatory and Development Authority of India (IRDAI), it seems farmers are opting state-owned insurance companies to claim insurance against crop loss much more than their private counterparts.
Direct inference of this is the fact that as much as Rs 11,905.89 crore was collected by 11 private sector insurers as premium, but they faced insurance claims of only Rs 8,831.78 crore, clocking profits of roughly Rs 3,000 crore. In the same financial year, state-owned insurers incurred a loss of Rs 4,085-crore losses, raising questions about the allocation of business.
Premiums collected by private insurers from the government were higher than the claims made by farmers for crop losses due to floods, earthquakes or shortfall of rain during the year.
According to the report by Indian Express five PSU insurers collected Rs 13,411.1 crore in premium from the government and farmers, but farmers made claims of Rs 17,496.64 crore due to crop losses. Among PSU insurers, Agriculture Insurance Company of India Ltd (AIC) accounted for the bulk of the losses.
The central and state governments pay 98 percent of the premium, and farmers contribute just 2 per cent.
The data of PSU insurers shows that the premium collected is not enough to cover the claims made by farmers, as a major chunk of it — 80-85 percent — is reinsured and they can recover the losses from reinsurers. The AIC alone has a deficit of Rs 4,446 crore as the main crop insurer has received claims worth Rs 12,339 crore from farmers as against the premium of Rs 7,893 crore, IRDAI data reveals.
Profits for insurers from the government’s crop insurance scheme — Pradhan Mantri Fasal Bima Yojana (PMFBY) — are expected to rise further as actual disbursals are likely to be much lower than the claims made by the farmers. Lower claims have already left a profit of Rs 3,074 crore in the books of private players.
Of the total 474.9 lakh farmers who were covered under crop insurance PMFBY and Restructured Weather Based Crop Insurance Scheme (RWBCIS), 275.4 lakh farmers made claims worth Rs 26,050 crore as of March 2018. This works out to more than 100 percent claim as insurers collected only Rs 25,291 crore as premium. These estimates are preliminary calculations without considering the reinsurance recovery.
Farmers have also realised it’s a long wait for claiming money under the scheme. Delay for reimbursements can go up to 18 months with the Centre and states delaying the payment of premium to insurance companies, industry officials said. Most states are delaying payment of premium which, in turn, leads to delay in payments to farmers, said a former chairman of an insurance company.
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