India: Some general insurers lose money on flagship crop insurance scheme
Source: Asia Insurance Review | Mar 2019
Several general insurers offering the government backed crop insurance scheme, Pradhan Mantri Fasal Bima Yojana (PMFBY), are posting losses from this line of business.
Loss ratios under this portfolio have risen to almost 150% due to climate-related crop damage, reported MoneyControl. A senior insurance official said while the number of claims paid has been on the rise, premiums have stayed constant.
Other media reports say that data from the agriculture ministry showed that PMFBY enrolment (during the monsoon kharif season) rose from 30.9m farmers in 2015 to 40.3m in 2016, a 30% jump. But delayed assessment of crop loss and settlement of claims which took 6-9 months to complete led to farmers losing interest. Enrolment fell to 34.8m in 2017 and to 33.3m in kharif 2018. Livemint reported that part of the decline was also because of a spate of farm loan waivers since mid-2017. PMFBY is mandatory for farmers who take up crop loans.
Launched in 2016, PMFBY compensates farmers if any of the notified crops fail due to natural calamities, pests and diseases. The scheme also encourages farmers to adopt modern agricultural practices. A