Crop insurance coverage declines in FY24 as four top insurers cut exposure

Crop insurance premium underwritten had risen by 8.66 per cent to Rs 29,465 crore in the previous fiscal (FY23).

The decline is mainly due to the 32 per cent fall in premium income underwritten by state-owned Agriculture Insurance Company (AIC) to Rs 9,890 crore during FY24 from Rs 14,619 crore a year ago, according to data released by the General Insurance Council. AIC is the leading crop insurer in the country. Four government-controlled insurers — AIC, New India Assurance, Oriental Insurance and SBI General — reduced their exposure to crop insurance in FY24.

What’s interesting is that AIC paid claims to the tune of Rs 12,353 crore under PMFBY during the year.

State-owned Oriental Insurance Company also reduced its exposure to just Rs 8.94 crore in FY24 from Rs 1,752 crore a year ago. SBI General Insurance also reduced its exposure. New India Assurance Company, the largest insurer in the country, reported a negative premium underwritten at Rs 34.41 crore as against Rs 11.38 crore last year.

“Four insurers controlled by the government directly or indirectly reported a decline in crop insurance coverage. The farm sector is a vital sector of the economy. Public sector entities should have been in the forefront of providing cover to the farmers who are facing the risk of losses due to floods, heatwaves and unseasonal rains,” said an official of an insurance firm.

FY24 was a nightmare for farmers as they faced crop losses due to a host of factors, leading to a rise in inflation levels.

However, general insurers overall reported a 19.5 per cent rise in premium income underwritten from Rs 17,391 crore a year ago to Rs 20,786 crore. As many as eight general insurers kept away from crop insurance during the year.

The PMFBY scheme, which is currently integrated with multiple stakeholders on a single platform, has covered nearly 4 crore farmers with more than 50 different crops in FY24 under the insurance coverage. More than 55 per cent of the insured farmers in the year are under non-loanee farmer category and are majorly enrolled through CSCs (common service centres) as a channel partner wherein the channel has registered an impressive 4 crore farmer applications, with 2.5 crore and 1.5 crore enrolments in Kharif and Rabi seasons, respectively.

PMFBY provides a comprehensive insurance cover against failure of the crop, thus helping in stabilising the income of the farmers and encourage them for adoption of innovative practices.

The scheme is compulsory for loanee farmer obtaining crop loan or kisan credit card (KCC) account for notified crops. However, it’s voluntary for other/ non loanee farmers who have insurable interest in the insured crop. The maximum premium payable by the farmers will be 2 per cent for all Kharif food and oilseeds crops, 1.5 per cent for rabi food and oilseeds crops and 5 per cent for annual commercial or horticultural crops.

To expand coverage of PMFBY, the Ministry of Agriculture and Farmer Welfare launched AIDE (App for Intermediary Enrolment), which allows intermediaries to enrol non-loanee farmers from Kharif 2023 onwards. This initiative successfully engaged insurance brokers and resulted in 71 per cent of farmer enrolments through Point of Salespersons (PoSPs), totalling 6.88 lakh farmer applications with more than 4.15 lakh hectares of area under insurance across 11 States and 12 insurers, the Ministry said in a note to the CEOs of insurance companies and broking firms, it said.

“Utilising such extensive network of over 12 lakh PoSPs via insurance brokers offers a substantial opportunity to increase non-loanee farmer enrolments. This strategy significantly enhances the enrolment of non-loanee farmers while simultaneously expanding their access to a diverse range of retail insurance products,” the Ministry said.

As per the service level agreement (SLA), insurance intermediaries should provide enrolment services to non-loanee farmer through the AIDE (mobile and web platform) developed by Ministry of Agriculture. Following the successful submission of the application on AIDE and the issuance of an acknowledgment to the non-loanee farmer, the premium will be collected and remitted to the insurance companies in accordance with the timeline specified in the applicable operational guidelines of PMFBY and RWBCIS, as amended from time to time.