PM's crop insurance scheme: Centre to haul up insurance firms, states

The central government said it would be imposing a penalty on both state governments and insurance companies for delayed settlement of claims under the Pradhan Mantri Fasal Bima Yojana (Prime Minister's Crop Insurance Scheme).

Insurer entities will have to pay interest at 12 per cent yearly for any delay in settling claims beyond two months. States would pay likewise for any delay beyond three months in releasing their share of the subsidy.

Delayed settlement of claims has been a big drawback of the scheme. A prime reason is reluctance by states to issue their share of the premium subsidy; so also procedural delays by insurance companies. Central officials say as against the mandated two months, the average time taken to settle a claim has been five to six months, Farmers under the Yojana are charged a uniformly low premium of two per cent for all kharif crops, 1.5 per cent for all rabi crops and 5 per cent for commercial and horticultural crops. The difference between the premium paid by the farmer and the Actuarial Fair Premium is subsidised, with half each borne by Centre and state.  Almost 30 per cent of the Union agriculture ministry’s budget is now spent on this premium.

New operational guidelines also specify a standard operating procedure for evaluating the performance of insurance companies and their de-empanelment. And, include perennial horticulture, as an experiment, in the cover. 

Cloudbursts or natural fire in localised calamities, in addition to hailstorms, landslide and inundation, have also been included from this year, plus coverage of crop loss due to attack by wild animals.

To increase the share of coverage of non-loanee farmers, the Centre has fixed a target of 10 per cent incremental growth for companies over the farmers covered the previous year. The new rules also rationalise the process for releasing the premium. A separate budget has been proposed for administrative expenses.