May bring private insurers back into crop insurance business
Claims to premium ratio under Pradhan Mantri Fasal Bima Yojana (PMFBY) and other crop insurance scheme were around 61 per cent in 2020-21 as against 85 per cent in 2019-20, as a favourable weather lowered crop damages in most of major producing States, except Madhya Pradesh, according to latest data compiled by the Agriculture Ministry.
The implication of the lower claim ratio is seen to help bring back interest of private insurers in the crop insurance business.
Against the Rs. 31,675 crore gross premium collected, the reported claims stand at Rs. 19,197 crore as on March 31 for 2020-21 kharif and rabi seasons.
However, the claims ratio is 106 per cent in Madhya Pradesh where the Agriculture Insurance Company (AIC) had to pay out Rs. 7,494.2 crore against gross premium of Rs. 7,064.4 crore. In Haryana, the claims ratio is higher than national average at 86.2 per cent (claims Rs. 1,127.5 crore) while it is 64.4 per cent ( Rs. 4,092.4 crore) in Rajasthan and 60.6 per cent ( Rs. 887 crore) in Chhattisgarh. On the other hand, Uttar Pradesh has 31 per cent ( Rs. 500.8 crore), Tamil Nadu 60 per cent ( Rs. 1,887.2 crore), Odisha 39.1 per cent ( Rs. 562 crore), Maharashtra 21.3 per cent ( Rs. 1,382.7 crore) and Karnataka 46.2 per cent ( Rs. 959 crore).
Until January-end, the claims ratio was around 35 per cent as Madhya Pradesh government had delayed finalising its yield data, said a government official.
Most claims settled
However, most of the claims are paid unlike in the past when it was an endless wait for farmers, the official added. As much as Rs. 17,783 crore have been paid so far, which is 92.6 per cent of total reported claims amount.
Of the Rs. 1,414 crore of outstanding, the insurer in Madhya Pradesh has to clear Rs. 920 crore (65 per cent) and it is pending due to some technical issues as entire Rs. 7,494.2 crore claims received in the State have been approved by AIC for disbursal. Over 49 lakh farmers in Madhya Pradesh on February 12 had received crop insurance claims of Rs. 7,618 crore (including Rs. 1,000 crore of past claims) under the PMFBY scheme after the State government finalised the yield data facilitating the disbursal.
Private players exit space
At least four private insurers including ICICI Lombard General Insurance and Tata AIG had exited the crop insurance business due to losses and high re-insurance costs.
Even public sector insurers are reducing their exposure to crop insurance as a result burden is gradually shifting to AIC. Besides, several States like Gujarat, Telangana, Andhra Pradesh and West Bengal have exited PMFBY.
Maharashtra, one of the major States in PMFBY with about 20 per cent share in enrolled applications as well as in gross premium, may opt out of the scheme in 2022-23. The State government is considering launching its own crop insurance scheme for farmers.