The latest data on crop insurance shows that insurance companies have made a profit of 34,373 crores from 2021-22 to 2023-24. Under the central government’s crop insurance schemes, insurance companies have paid a total of 3 56,325 crores, while Rs 6 90,698 crore has been collected. In the last 3 years, farmers have contributed 9 10,937 crore into GDP. It is obvious that the profits of companies have increased from crop insurance business compared to the last three years. The main reason for this is the spread of favorable monsoon and technology. This is the reason why many companies that have left before have returned to the crop insurance business.
How decline in crop insurance request?
The insurance companies made a total of Rs 34,373 crore from 2021-22 to 2023-24. On the contrary, insurance companies have paid Rs 78,616 crore insurance claims after collecting Rs 93,629 crore as a total premium between 2018-19 and 2020-21. That is, only Rs 15,013 crore is profitable. It was about 2,000 crores higher than the farmers’ premium.
According to official data, the Indian Agricultural Insurance Company (AIC), which has the largest presence in the Prime Minister’s Crop Insurance Scheme, paid the claims worth Rs 5,565 crore, and its total premium collection in 2023-24 was around Rs 19,490 crore.
Not the good days of each company!
It is not that every insurance company is making a big profit, citing official resources of an English newspaper ‘Business Line’. It depends on the expansion of its business in the geographical areas and the selected crops, as there are some major risk areas, where the amount of the claim is usually higher. Companies must compensate for those risks by taking insurance in relatively safe areas. “
By 2023-24, when the Chola MS returned to the crop insurance business after two years, the company had to distribute the claim of Rs 406 crore, while the company collected Rs 526 crore as premium. Similarly, Oriental insurance, which has been away from this business for two years, collected the total premium for Rs 1,912 crore in 2023-24, which led to the loss of oriental insurance.
What is a cup and hat model?
Since 2023, the government has allowed the cup and hat models (80: 110 and 60: 130), in which the benefits and losses of insurance companies are shared, official sources said. If the insurance company gives less claims less than a certain limit, the government (both the center and the state) will go to the state treasury. On the other hand, if the insurance company has to give more claims more than a certain limit, it is necessary to pay the claim to the Center and the States.
On March 25, farmers (19.79 crore applications) under the Prime Minister’s Crop Insurance Scheme have received claims worth Rs. The insurance claim for 2024-25 has not yet been finalized.
More than 100% of these states
In 2018-19, farmers’ claims against the premium collected by insurance companies in Maharashtra, Andhra Pradesh, Haryana and Chhattisgarh increased by more than 100 percent, while the claim rate (against the total premium) was 75.4 per cent (against the total premium). Under the PMFBY and weather -based crop insurance scheme (WBCIS), farmers pay 1.5 per cent of the amount insured for rabi crops and 2 per cent for Carib, while 5 per cent for cash flows.
The actual premium is obtained every year through the process of insurance companies. In this, the amount of more than the amount paid by the farmers is subsidized by the government, which is shared on the basis of 50:50 by the Central and State Governments.
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