Reliance Gen Ins not paying PMFBY claims for Kharif 2021: Top Maha official

Insurer wants premium subsidy released to settle losses, says its commitments to reinsurers and subsequent claim recoveries have been impacted

In a letter to the central government, Maharashtra’s Agriculture Commissioner has alleged that Reliance General Insurance has not paid claims under the Pradhan Mantri Fasal Bima Yojana (PMFBY) for Kharif 2021 season despite receiving the first instalment of premium while all other insurance companies have started have started depositing the loacalised calamity and mid-season adversity claims amount in the affected farmers’ bank accounts.

“In 2021, the Insurance companies have already received an amount of Rs 2,312.22 crore premium amount. Accordingly, all the insurance companies except Reliance General Insurance Company have started depositing the localised calamity and mid-season adversity claims amount in the affected farmers's bank account”, the letter written by Dheeraj Kumar, Commissioner Agriculture of Maharashtra read.

Countering the allegation, the insurer, replying to a Business Standard query, said, it has a long-term contract (3 years) of implementing PMFBY with government of Maharashtra as per the operational guidelines released by government of India. According to these guidelines, applicable premium subsidy needs to be released to settle the losses. Due to non-receipt of payments, the company’s commitments to reinsurers and subsequent claim recoveries have been impacted.

The company said it in its multiple communications has requested the department of agriculture, government of Maharashtra and ministry of agriculture & farmers Welfare to release the long pending subsidy so that it can speedily clear the farmer claims with due support from its reinsurers.  

Previously, the private insurer had raised grievances regarding the inordinate delay and non-receipt of premium subsidy in the earlier season. In a letter to the CEO of PMFBY, Reliance General Insurance said, eligible claims for Kharif 2020 and Rabi 2020-21 have been kept on hold due to non-receipt of overdue state share of subsidy Rs 156 crore for Kharif 2020 and 34 crore for Rabi 2021 season. Also, since the state share has not been released, the corresponding central government’s share has also not been released. As a result, total premium outstanding against the previous season is Rs 355 crore.

Hence, it is not has not settled claims for the Kharif 2021 season.Reliance General Insurance has received Rs 430.59 crore as first instalment premium for the Kharif 2021 season and wanted to adjust it against the state liability of premium subsidy for previous season so that balance admissible claims can be settled to the farmers.

“We believe the unilateral and arbitrary attempt to delay the release of due premium/claims shall set a wrong precedent, have potential issues of compliance with the reinsurers, regulators and hamper effective implementation of PMFBY besides lack of commitments for future participation in the scheme by insurers”, the insurer said in its letter.  

Kumar in its letter has said, the reason for pending subsidy component of Kharif and Rabi 2020, has already been raised by the state (Maharashtra) before government of India from time to time, and recently government has directed the state committee to resolve the issue by calling all the insurance companies for deliberation on this issue.

Accordingly, the matter is still pending to be resolved before the state grievance redressal committee and Reliance General Insurance is on the wrong side of guideline to use this to decline loss payments to farmers for Kharif 2021, the letter alleged.

The letter has alleged that Reliance general insurance earned Rs 2,285 crore as profits in the last five years in Maharashtra from crop insurance scheme but the claims percentage to premium paid by the company, 26.55 per cent, is the lowest among all the insurance companies. In comparison, other insurance companies such as Oriental Insurance’s payout ratio is 163 per cent, Bajaj Allianz general insurance’s payout ratio is 148 per cent, IFFCO Tokio’s is 39 per cent, HDFC Ergo is 42 per cent, and Bharti Axa’s is 45 per cent.

“This shows that Reliance general insurance company is deliberately avoiding payments to farmers on some pretext or other; is wilfully suppressing losses occurred to avoid payments to farmers and is resorting to total unethical and corrupt practices to tarnish the name of PMFBY and denying benefits of the scheme to farmers”, Kumar said in his letter.