General insurers in India have reduced their exposure to a government-backed crop insurance scheme in the fiscal year 2024 (FY24) despite the government’s push to expand insurance coverage in the farming segment.
Gross written premiums (GWP) under Pradhan Mantri Fasal Bima Yojana (PMFBY), the government-backed scheme, declined by 4.17% to 30.68bn (US$367m) rupees during the fiscal year, compared to 32.01bn rupees the previous year, reported The Indian Express.
The FY24 decline occurred even as farmers faced crop losses due to floods, unseasonal rains, and heatwaves.
In comparison, the crop insurance premiums underwritten rose 8.66% to 29.47bn rupees in FY23.
The decline in FY24 has been mainly attributed to a 32% fall in premium income underwritten by the state-owned Agriculture Insurance Company (AIC), the leading crop insurer in the country, which dropped to 9.89bn rupees from 14.62bn rupees a year ago, according to data released by the General Insurance Council.
Four government-controlled insurers—AIC, New India Assurance, Oriental Insurance, and SBI General—also reduced their exposure to crop insurance in FY24.
“Four insurers controlled by the government directly or indirectly reported a decline in crop insurance coverage,” an official of an insurance firm told The Indian Express.
“The farm sector is a vital sector of the economy,” the official added. “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.”
The PMFBY scheme provides comprehensive insurance coverage against crop failure, helping to stabilise farmers’ income and encouraging the adoption of innovative practices. It is currently integrated with multiple stakeholders on a single platform and covered nearly 40 million farmers and more than 50 different crops in FY24.
The scheme is compulsory for loanee farmers obtaining crop loans or Kisan Credit Card (KCC) accounts for notified crops, but is voluntary for other non-loanee farmers.
The maximum premium payable by farmers is 2% for all Kharif food and oilseeds crops, 1.5% for Rabi food and oilseeds crops, and 5% for annual commercial or horticultural crops.
In a bid to expand PMFBY coverage, the Ministry of Agriculture and Farmer Welfare has launched an App for Intermediary Enrolment (AIDE) from Kharif 2023, enabling intermediaries to enrol non-loanee farmers.
