There is a need for a regulatory body along the lines of the Insurance Regulatory and Development Authority to monitor firms offering agricultural insurance, an expert has said.
“Many problems associated with the growing agricultural insurance sector can be solved if there is a strong oversight body,” said a senior official with a public sector insurance company involved in agricultural insurance.
Even though the national flagship insurance scheme — Pradhan Mantri Fasal Bima Yojana (PMFBY) — insists that insurance firms offering agricultural insurance have to have offices at block levels, such penetration is non-existent in most cases.
Most empanelled companies hesitate to build infrastructure at local levels as they are not sure about their continuity in the same region as the contracts are given on an annual basis.
“Currently, only Tamil Nadu and Madhya Pradesh have given a long-term contract of three years to crop insurance firms. Ideally, an insurance firm should be allowed to work in a region for three to five years. This will help them develop infrastructure,” the industry source said.
Multifarious aspects The senior industry official also said inclusion of crop destruction by wild animals under the insurance scheme is under active consideration, as demanded by many States.
Similarly, a beginning has been made in the case of offering insurance cover to non-loanee farmers. They can take insurance cover for crops notified by the State governments, if applied through Common Services Centres.
Paucity of data According to the official, one of the major problems that the agri insurance sector encounters is the lack of proper crop cutting experiment (CCE) data, which are vital for assessing crop damage. For an operation such as PMFBY, there is a need for nearly 8 lakh CCEs, four times more than what is done currently.
“Not just quantity of CCE, even quality is a serious issue. Most of the time such CCE is inefficiently carried out and at times they are plainly cooked up,” he said.
According to the official, more often than not, most complaints of farmers not being paid compensation on time was because the States do not pay their share of premium subsidy on time.
Significantly, a recent study by the New Delhi-based Centre for Science and Environment (CSE) found that State budgetary constraints were probably a major factor for such delays/defaults in premium subsidy payments. “In many states, PMFBY is taking away a significant part of the State agriculture budget,” the CSE report said.
In Madhya Pradesh, for instance, the expected premium subsidy was ₹1,485 crore, which is 60 per cent of its total agriculture budget of ₹ 2,448 crore in 2016-17.
In the meanwhile, a statement issued by the central government refuted the allegation that private insurance companies are benefiting from the scheme. “Lower yield losses in Kharif 2016 have naturally meant lower claims of losses and consequent payment of claims. However, in States like Karnataka, Tamil Nadu, Gujarat, Rajasthan, Uttar Pradesh and Tripura, the claim percentages have been very high,” it said.
High claim level For instance, certain districts in Karnataka have had claims that are several-fold higher than the premium they paid. Claims in Mandya, for example, were 630 per cent of total premiums paid, Chitradurga was 408 per cent and Mysuru, 406 per cent.
Similarly, in Tamil Nadu, the claims are higher than premium collected in virtually all the districts, the Centre’s statement said.