To make PMFBY a success, adequate support services have to be in place and for this it is necessary to follow the best practices prevailing in high and middle-income countries
To achieve the target of coveri?ng 50 per cent of the farming households un?der the Pra?dh?an Ma?n???tri Fasal Bhima Yoj?a?na in next 3 years and address the challenges in cr?op insurance, the governm?ent should introduce a farm insurance law, say experts.
In many developed and developing countries, the cr?op insurance system is codified through proper legislation, so the various agencies involved in the process do their job sincerely, said MK Poddar, GM, Agriculture Insurance Company of India.
“In India an agricultural insurance law is overdue. Ti?me is ripe that India takes it seriously and goes for it as a substantial part of central and state funds are invol?v?ed,” he said in an IRDAI journal. To make PMFBY a major success, ade?quate su?pport services have to be in place and for this it is necessary to follow the best practices prevailing elsewh?e?re particularly in high and middle-income countries. A co?m?prehensive legislation on agriculture insurance wo?uld facilitate this, he added.
Further, crop insurance is different from general insurance when it comes to receiving insurance premiums and making claim intimation. Hence a different set of rules are needed to govern crop insurance.
Moreover, crop insurance is plagued by different challenges. In India, crop yield estimation in the insurance units is done by conducting crop cutting experiments (CCEs) in the field-plots selected thr?ough a sampling scheme. Subjectivity in the yield me?asurements has bec?ome a concern. According to experts, crop cutt?i?ng experiments is an ill-m?a?naged activity that needs im?mediate revamp. They wa?nt remote sensing technology and synthetic aperture radar imagery to be used for more accurate data.
Moreover, the crop cutt?i?ng experiments data oft?en takes a lot of time to get tra?n?sferred from farms to insurer’s data base and results in delay in claim settlement, said Vivek Lalan, assistant V-P (agri business), Bajaj Allianz General Insurance.
“Due to lack of adequate manpower to conduct crop cutting experiments in a short time window (usually 20-40 days), the quality of CCEs is affected. In addition to that, manual capturing and consolidation of CCEs yield data further delays the process,” added Az?ad Mis?hra, vice-president, HDFC ERGO General Insurance.
Another critical challe?nge is distribution with “bad risks” getting insured. Areas or crops prone to losses due to lack of irrigation facility or crops, which are too susceptible to adverse weather conditions are usually covered, leaving majority of the “good risks” out of the insurance basket. Predominantly bad-risk-insurance portfolio will attract a high premium rate which in turn will put a str?ain on state government’s budget. Experts want existing risk-sharing between insurance companies, central and state governments and reinsurers may be reviewed to strike a win-win situation for all the stakeholders.
Lower awareness and le?ss participation by non-loanee farmers work against spread of crop insurance.