News Non-Life04 Sep 2018

India:Delay in settlement of crop insurance claims could invite penal action

| 04 Sep 2018

India's Agriculture Ministry has recommended laying down provisions to punish delays in payment of crop insurance claims. It is also working to incentivise those who settle the claims before the deadlines.

Indian agriculture minister Mr Radha Mohan Singh speaking to the financial daily BusinessLine has said that his ministry has proposed to the Finance Ministry that whichever agency causes the delay should be liable to pay the claim amounts to the affected farmers together with interest at 12% for the period of delay.

Timely settlement of claims will be incentivised

According to the BusinessLine report, Mr Singh has said that his ministry is also exploring the “idea of giving incentives to those who help hasten the process of claims settlement”.

The delay in settlement of claims has been a major reason for a drop in the number of farmers opting for the government sponsored crop insurance scheme Pradhan Mantri Fasal Beema Yojana (PMFBY). In the fiscal year ended March 2018 there was a drop of 17% in enrolment in the PMFBY.

Poor claim settlement record

The BusinessLine report says that in an answer to a question in Parliament last month, the government had stated that during 2017 kharif crop (monsoon crop) season, claims worth INR16,448 crore ($2,313m) were estimated and claims for INR13,768 crore were approved. Of this, claims worth only INR11,899 crore have been settled by the insurance companies.

With wider use of technology in crop cutting experiments, the Agriculture Ministry is hopeful of these issues being resolved soon.

Agencies appointed for pilot studies

The ministry has engaged nine agencies to carry out pilot studies for different crops across the country. These pilot studies were to be conducted during the current kharif season and the forthcoming rabi (winter crop season). The organisations have to submit their reports by February next year.

Lack of awareness returns poor enrolment

In a related development a survey carried out by Weather Risk Management Services in eight Indian states earlier this year has found that only 28.7% of the sampled farmers were aware of PMFBY.

According to the survey, the farmers complain that the process of enrolment for non-loanee farmers (those farmers who have not obtained loans from banks) is quite cumbersome, necessitates several certifications and consumes a lot of time.

The survey findings also note that of those farmers who are aware of PMFBY, only 12.9% could get their crops insured, of which 77% were linked to loans. However, there is high willingness to join the PMFBY amongst those farmers who could not get themselves insured due to various reasons.

The survey has pointed out that the main reason for low enrolment in the crop insurance scheme is the lack of trained resources and lack of awareness at every stage of implementation of the scheme.

Transparent platform for grievance redressal required

The survey report has said that there is a need for a transparent platform wherein insurance application, survey request and payment status can be checked. Grievances of farmers and insurance companies can be redressed via a grievance redressal mechanism which can be set up by the government in advance.


 

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