One insurer, Universal Sompo GIC, has settled all insurance claims for last year's summer crop season under the government-backed Pradhan Mantri Fasal Bima Yojana (PMFBY or Prime Minister's Crop Insurance Scheme). The insurer, which offers the scheme only in the southwestern state of Karnataka, is the only one out of 10 to report a claims payout of 100%.
Insurance companies participating in PMFBY and the Restructured Weather-based Crop Insurance Scheme, both of which were launched last year, have so far honoured just 17% of the total claims raised during the 2016 kharif or summer crop season. Insurance claims totalled INR4,270.6 crore (US$660 million) under the two schemes, according to the Ministry of Agriculture and Farmers Welfare. Of the total claims, only INR714.1 crore was paid to farmers by March 2017, shows the “State of India’s Environment 2017: In Figures” report released by the Centre for Science and Environment and Down To Earth magazine.
The two schemes, which plan to cover 50% of cropped area by 2019, already cover 30% of cropped area and are implemented in 21 states. Close to 39 million farmers were covered under these schemes in the kharif season of 2016.
Currently, 10 general insurance companies are offering crop insurance under the PMFBY. While insurance companies have collected INR9,041 crore as premium (for kharif 2016 only), they have paid just 25% (INR570 crore) of the total claims made of INR2,324 crore.
Crop insurance has helped the non-life industry record a 32% growth in premiums the last fiscal year ended 31 March 2017 to over INR1 trillion for the first time, despite the absence of new large projects.
Crop insurance has emerged as the third largest line of business after motor insurance and health insurance following the launch of PMFBY last year. Data from the General Insurance Council showed that farm insurance had a market share of 5.5% in FY16, that grew to 16.1% in FY17.