As the Centre has been trying to win back States that quit the flagship Pradhan Mantri Fasal Bima Yojana (PMFBY), a drop in gross premium in the current kharif season can be a good sign for the crop insurance scheme.
According to preliminary data from 18 States, the gross premium collected under PMFBY this kharif season is ₹14,943 crore as of August 10, compared with ₹16,853 crore during the whole of last season. There could be some increase in gross premium as more data are compiled, experts said.
The amount of sum insured is a notch higher at ₹94,642 crore so far this season — up from ₹94,604 crore last season.
However, data of Andhra Pradesh, which returned to implement the scheme last month, have not been included. Andaman and Nicobar’s data for this season are not available where 359 farmers were enrolled and ₹17.53 lakh gross premium was collected in kharif 2021. Karnataka’s crop insurance data are also excluded as these are not available on the Centre’s dashboard.
“The premium rate has gone down in general as a risk factor has been lowered after integration of digitised land record in many States. Now, only one owner can be enrolled against his land whereas there were no such checks before,” said a senior executive of an insurance firm. Citing the case of Madhya Pradesh, he said another ₹500-600 crore may jump in gross premium but it will still be much lower from last year.
Beed formula
This kharif, the gross premium under PMFBY in Madhya Pradesh has reached ₹2,618 crore as of August 10, whereas last year it was ₹4,286 crore. The State is implementing the 80:110 model, which is also known as the Beed formula where the profit and loss are shared with States by insurance companies. Under this formula, if the claims ratio is 70 per cent of gross premium, the insurance company will have to return 10 per cent after keeping 20 per cent with itself. The liability of the insurer is also up to 110 per cent of gross premium and claims beyond that threshold have to be paid by the State.
According to the latest data, the total number of farmers’ enrolment this year is 1.48 crore against 1.5 crore last season and the area covered is 221.36 lakh hectares (lh) against 239.22 lh last year. As Andhra Pradesh has gone for universal coverage this year, the enrolment number will be higher at end of the season and it will go up further when more States re-join, officials said. Telangana is likely to re-join PMFBY scheme from kharif 2023 on the same model of Andhra Pradesh, sources said.