Profit of insurance companies implementing PMFBY
(a) the details of Pradhan Mantri Fasal Bima Yojana (PMFBY) and the number of farmers in each State who have been benefitted under this Scheme so far;
(b) whether Government has received any complaint about the insurance companies making huge profits at the cost of farmers, if so, the details thereof; and
(c) the action Government has taken thereon?
GOVERNMENT OF INDIA
MINISTRY OF AGRICULTURE AND FARMERS WELFARE
RAJYA SABHA
UNSTARRED QUESTION NO-353 ANSWERED ON-20.07.2018
Profit of insurance companies implementing PMFBY
353 . Shri Amar Singh
(a) the details of Pradhan Mantri Fasal Bima Yojana (PMFBY) and the number of farmers in each State who have been benefitted under this Scheme so far;
(b) whether Government has received any complaint about the insurance companies making huge profits at the cost of farmers, if so, the details thereof; and
(c) the action Government has taken thereon?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE AND FARMERS WELFARE
( SHRI PARSHOTTAM RUPALA)
(a): The flagship scheme of Pradhan Mantri Fasal Bima Yojana (PMFBY) was introduced from Kharif 2016 season in the country. The salient features of the Scheme include comprehensive risk coverage from pre-sowing to post harvest losses against non-preventable natural risks; removal of cap on premium resulting in reduction of sum insured and claims, if any and equating the sum insured with Scale of Finance to maximize the risk coverage at minimum uniform fixed premium rate payable by farmers i.e. maximum 2% for Kharif crops, 1.5% for Rabi Crop and 5% for annual commercial/horticultural crops, with balance of actuarial/bidded premium being shared by the Central and State Government on 50 : 50 basis; lowering of unit area of insurance to village/village panchayat level for major crops and to individual farm level for localised risks of hailstorm, landslide and inundation and post-harvest losses thereby promoting more realistic assessment of losses; stipulation of time lines for every stage of the claim settlement cycle with final settlement to be done within two months from harvest; adoption of technology for accurate and transparent loss assessment through capture of CCEs through smartphones/ CCE Agri App on National Crop Insurance Portal and use of Remote Sensing Technology. State-wise details of farmers covered under the scheme and farmer who got claims under the scheme during Kharif 2016, Rabi 2016-17 and Kharif 2017 are given in Anenxure.
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(b) & (c): Various references including VIP references and reports in news papers regarding profit to insurance companies have been received from time to time by the Government. Under general insurance including crop insurance, insurance companies are tasked with covering risks, which in case of crop insurance is related to risks associated with crops. Whereas claims depend upon the happening and severity of climatic vagaries. The payout depends on the quantum of crop loss which remains high in the calamity hit years and low in normal years. In a good monsoon year like 2016-17, claims are bound to be on the lower side. Unlike 2016-17, the years 2014-15 and 2015-16 were relatively calamitous years and claims paid by insurance companies were more than the premium paid to them under the schemes of Modified NAIS and Weather Based Crop Insurance Scheme (WBCIS), which were implemented on actuarial basis similar to PMFBY. Insurance companies may make savings in a good year which are utilised for payouts in bad seasons. However, Government has also taken steps to achieve rationalisation of actuarial premium rates charged by the insurance companies. Towards this, State Governments have done clustering of high/low/medium risk areas/districts to moderate the premium rate and to determine premium rate through competitive bidding. Against Gross premium of Rs. 16599.58 crore and Rs. 5950.91 crore, claims of Rs. 10505.27 crore and Rs.5991.74 crore respectively have been estimated during Kharif 2016 and Rabi 2016-17. Out of which claims of Rs. 10283.91 crore and Rs. 5052.84 crore have already been paid for these seasons. During Kharif 2017, total estimated claims are Rs. 15895.85 crore against the gross premium of Rs. 19509.72 crore, of which claims of Rs. 9628.61 crore have already been paid. State-wise details are given in Anenxure.
Source: Rajyasabha
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