As the Pradhan Mantri Fasal Bima Yojna (PMFBY) completes one year, poor availability of data has come up as a challenge in implementing it.
This year, some of the states where crop insurers are having a tough time in claim settlements include Gujarat, Karnataka, Rajasthan, West Bengal and Tamil Nadu. At the crux of the problem lies the crop cutting experiment (CCE) data, which forms a key element of the new scheme. CCE data at the harvest time helps assessing yield loss, and it requires substantial manpower. At present, state governments have the responsibility of conducting the experiments.
According to insurers in several states, crop cutting experiments were not properly conducted. While in some cases the experiments were not conducted on the date intimated to the insurers, in others data presented by the state government did not match ground realities.
For example, in Gujarat, despite a bumper production of groundnut, the claim ratio, as determined by the state government, has been as high as 200 per cent. With insurers reluctant to pay claims based on the CCE, the technical advisory committee has come to the conclusion that only 50 per cent weight should be given to the CCE done by the state government, the rest of the assessment should be based on other parameters like past experience in similar weather conditions.
Kharif production of groundnut in Gujarat saw nearly 97 per cent increase over last year’s number. “In Gujarat, there is a huge discrepancy in government data and ground reality. It was surprising that in such a good year the crop losses were shown so high according to the government data,” said a senior official of a general insurance company.
In Rajasthan, too, the CCE were affected last year due to a strike by government-appointed village accountants. Hence, questions are being raised about the validity of the government data on crop loss.
“There was a lot of laxity in conducting CCE by the state governments, and obviously this data is often not very reliable. The past one year was a good year in terms of crop insurance, and if in such a year the insurers suffer huge losses, there will obviously some reluctance on their part to further participate in the scheme,” said a senior official of a public sector general insurance company.
In West Bengal, according to a public sector company official, the insurers were not intimated about the date of CCE. State government officials in charge of it could not be reached for comments.
In Tamil Nadu, the insurers had one of the highest claim ratio, exceeding 300 per cent due to one the worst droughts in the past 140 years. “In Tamil Nadu, as and when we get the data from the government, we are examining and settling the claims,” said Sanjay Datta, chief of underwriting & claims at ICICI Lombard.
Total premium collections in the first year of PMFBY was estimated to be around Rs 22,000 crore, while the total claims were expected to be around Rs 15,000 crore. So far claims of about Rs 8,000 crore has been settled. This apart, delays in releasing funds from state government has also been an issue with the new crop insurance scheme, according to insurers.
The PMFBY is based on actuarial calculations and rates are based on risk perception. Thus, premiums differ based on crops and regions. However, the farmer pays only a flat two per cent premium; the rest is provided by the central and state governments. On an average, the premium rates come to around 12 per cent, with the state and central governments bearing five per cent each.