The general insurance industry is expecting total premium income from farm insurance to hit INR23,000 crore (US$3.58 billion) during the current financial year ending 31 March 2018, with the government pushing the Pradhan Mantri Fasal Bima Yojana (PMFBY).
This would be a 400% hike in premium from crop insurance of INR5,700 crore during the financial year ended 31 March 2016. Farm insurance premium soared to INR21,500 crore for the fiscal year ended 31 March 2017. The PMFBY was launched in January 2016.
Under PMFBY, premium payments are shared by the farmers and the central and state governments. While PMFBY is made mandatory for loanee farmers (farmers taking crop loan from banks), even non-loanee farmers, including share-croppers, are included under the scheme.
“Our estimates show the premium collected on all India basis would go up to INR23,000 crore during FY2018 and the Fasal Bima would become a major part of the Indian general insurance industry,” ICICI Lombard, Executive Director, Alok Agarwal, told Business Standard.
ICICI Lombard has partnered with North East Centre for Technology Application and Research (NECTAR), which uses drones and remote sensing technology for yield estimation by village and by crop.
Crop insurance penetration stood at under 30% at the end of last year. The central government is targeting to cover 50% of all farmers by the PMFBY by 2019.