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2019-07-09

Irregularities by Private Insurance Companies in PMFBY

Irregularities by Private Insurance Companies in PMFBY

(a) whether it is a fact that private insurance companies have made windfall gains under the Pradhan Mantri Fasal Bima Yojana (PMFBY), if so, the details thereof;
(b) the data on amount of farmers premium collected along with the number of farmers who paid premium, State-wise, district-wise and year-wise; and
(c) the amount of gross premium collected and the number of claims settled?

To know the answer of above questions reg. Irregularities by Private Insurance Companies in PMFBY please see below the full text of Loksabha Unstarred Question No. 2699.

GOVERNMENT OF INDIA
MINISTRY OF AGRICULTURE AND FARMERS WELFARE
LOK SABHA
UNSTARRED QUESTION NO: 2699
ANSWERED ON: 09.07.2019
Irregularities by Private Insurance Companies in PMFBY
Ramya  Haridas

Will the Minister of AGRICULTURE AND FARMERS WELFARE be pleased to state:-

(a) whether it is a fact that private insurance companies have made windfall gains under the Pradhan Mantri Fasal Bima Yojana (PMFBY), if so, the details thereof;

(b) the data on amount of farmers premium collected along with the number of farmers who paid premium, State-wise, district-wise and year-wise; and

(c) the amount of gross premium collected and the number of claims settled?

ANSWER

MINISTER OF AGRICULTURE AND FARMERS WELFARE
(SHRI NARENDRA SINGH TOMAR) 
(a) : The yield based scheme, namely, Pradhan Mantri Fasal Bima Yojana (PMFBY) and a weather index based “Restructured Weather Based Crop Insurance Scheme (RWBCIS) were introduced from Kharif 2016 with an aim to provide a simple and affordable crop insurance product to ensure comprehensive risk cover for crops of farmers against all non-preventable natural risks from pre-sowing to post-harvest, to provide adequate claim amount and timely settlement of claims. 18 General insurance companies including 5 Public Sector Insurance companies have been empanelled for implementation of the scheme.
Crop insurance is a major risk mitigation tool for the benefit of farmers. Insurance is all about spreading the risk over the period and over the area. As per provisions of the PMFBY/RWBCIS, premium from farmers alongwith Central and State Government share in premium subsidy is paid to the concerned insurance company for acceptance of risk and payment of claims as per provision of scheme. Insurers save premium in good seasons/years and pay high claims, if any in bad years from the savings made in the good years. 

Contd…2/-

-2-

Inspite of overall good monsoon during first two years of implementation of PMFBY, the claim ratio during 2016-17 and 2017-18 was about 74% and 83% respectively. But the farmers in most affected areas/States received higher claims and the claim ratio was high in these States viz. Kerala 209% and Karnataka-134%, during Kharif 2016, Tamil Nadu – 286% and Andhra Pradesh 172% during Rabi 2016-17. Similarly during Kharif 2017, the higher claim ratio is in the States of Chhattisgarh –451%, Haryana – 269%, Madhya Pradesh – 161% and Odisha – 216%. During Rabi 2017-18 high claim ratio States were Odisha (226%), Tamil Nadu (122%) and Chhattisgarh (105%). Though complete data for Kharif 2018 season is not available, high Claims ratio has been reported in States of Himachal Pradesh (215%), Haryana (120%), Uttarakhand (115%) and Chhattisgarh (111%) Hence, it is not correct to say that private insurance companies have made windfall gains under the Pradhan Mantri Fasal Bima Yojana (PMFBY).
In this regard, it is also informed that the difference between premium collected and claims paid is not the margin/profit for the insurance companies. The cost of reinsurance and administrative cost totaling 10% to 12% of gross premium also has to be borne by the Insurance Companies. Further, out of the total crop insurance business under the scheme more than 50% is shared by the 5 Public Sector insurance companies including Agriculture Insurance Company of India Ltd. (AIC).
(b) : The details are given in Annexure.
(c) : Details of gross premium collected and claims paid by empanelled general insurance companies and number of farmers benefitted during last two years and Kharif 2018 under PMFBY are given below:

(Rs. in crore)
Year Gross Premium Approved Claims Claims Paid Farmers benefitted 
(in lakhs)
2016-17 22103 16261 16257 146
2017-18 26163 21521 21270 175
Kharif 2018* 20923 10247 9046 80
* Provisional for Kharif 2018 season only. Some claims of Kharif 2018 and the claims of Rabi 2018-19 are not reported.

Source: Loksabha

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