Amid studies of some insurance coverage corporations making earnings within the authorities’s flagship crop cover scheme PMFBY, the Centre is planning to revamp the programme to rationalise premium price and encourage participation of more insurers.
The seemingly key modifications to the scheme can be carried out from 2023-24 crop yr (July-June) after the cupboard approval, in accordance to sources.
The Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in February 2016, goals to present monetary assist to farmers struggling crop loss/injury arising out of pure calamities.
Under this scheme, most premium payable by farmers is 2 per cent for all meals and oilseeds crops grown within the kharif (summer season) season, 1.5 per cent for identical crops grown in rabi (winter) season and 5 per cent for business and horticulture crops.
The distinction between premium and the speed of insurance coverage costs payable by farmers is shared equally by the Centre and states.
The scheme was final revamped in 2020 to allow voluntary participation of farmers and make manner for reporting crop loss inside 72 hours of prevalence of any occasion.
According to official sources, the necessity to additional revamp the scheme was felt as a result of publicity of insurance coverage corporations within the PMFBY was on declining mode. This led to lack of competitors forcing the present insurers to cost excessive premium price.
As per the coverage, insurance coverage corporations are empanelled for 3 crop years by way of a young course of. Around 18 insurers had been empanelled for a interval from 2019-20 until 2022-23. However, eight of them exited and 10 corporations are taking part within the scheme now.
The eight corporations had exited in 2021-22 crop yr, together with 4 every from authorities and personal sector, due to heavy losses following excessive declare ratio, sources mentioned.
However within the absence of competitors, insurance coverage corporations which had been left in fray mounted greater premium. As a outcome, some corporations made large revenue over the last crop yr because the claims for crop losses had been much less.
This made few state governments imagine that the PMFBY was benefiting solely insurance coverage corporations and never the farmers, sources added.
To sort out this drawback, sources mentioned a working group — constituted in 2021 by the agriculture ministry — examined the entire challenge and submitted a element report.
Sources mentioned the working group has really useful two approaches for implementing the PMFBY.
One is the “risk transfer approach”, being adopted presently, whereby full threat is transferred to implementing insurance coverage corporations. This will contain bearing complete declare legal responsibility by the insurance coverage firm.
Second is the “risk participation approach”, underneath which three various fashions are really useful to states for adoption whereby the claims in addition to surplus premium quantity (earned after clearing the declare) is shared between implementing states and insurer as per the mutually agreed components.
The three fashions are: revenue and loss sharing mannequin; cup and cap mannequin (60:130); and cup and cap mannequin (80-110).
Under the revenue and loss sharing mannequin, sources mentioned a state particular threat band could be created to share the revenue and loss between insurance coverage corporations and authorities. For occasion, the band for Bihar can be completely different from Maharasthra.
Under the cup and cap mannequin (60:130), the insurance coverage corporations would pay if the claims are between 60 and 130 per cent of the gross premium. Suppose the claims are under 60 per cent of the gross premium, it will likely be refunded by the federal government, and if claims are above 130 per cent of the gross premium then the federal government pays claims by way of insurance coverage corporations.
The third mannequin advised is the cup and cap mannequin (80:110) which is identical as above however insurance coverage corporations would clear claims whether it is between 80 and 110 per cent of the gross premium, sources mentioned, including that this mannequin is presently being carried out in Maharasthra and Madhya Pradesh.
According to sources, the working group has additionally advised use of newest know-how like drone for fast evaluation of crop loss and early fee of claims to the farmers.
According to official knowledge, the declare ratio in 2020-21 stood at 62.3 per cent of the gross premium. The reported claims had been Rs 19,022 crore, out of which 17,676 crore has been paid until date.
During the 2022-23 crop yr, the claims underneath PMFBY had been at Rs 9,867 crore, out of which Rs 8793 crore has been cleared up to now, the info confirmed.
(Only the headline and film of this report might have been reworked by the Business Standard employees; the remainder of the content material is auto-generated from a syndicated feed.)