Insurance cos to pay 12% interest to farmers in case of delay in settlement claims

Insurance companies will have to pay farmers 12 per cent interest in case of delay in settlement of claims under the farm insurance scheme PMFBY, as per the new guidelines of the government.

"Government has decided to incorporate the provision of penalties for states and insurance companies for the delay in settlement of insurance claims under the Pradhan Mantri Fasal Bima Yojana (PMFBY)," an official statement said.

This provision is part of the new operational guidelines issued by the government for the implementation of the PMFBY.

"The farmers will be paid 12 per cent interest by insurance companies for the delay in settlement claims beyond two months of prescribed cut-off date. State governments will have to pay 12 per cent interest for the delay in release of state share of subsidy beyond three months of prescribed cut-off date submission of requisition by insurance companies," the statement said.

 

The PMFBY, launched in 2016, is the most important tool to insure agriculture against climate and other risks. The scheme which is an improvement over the previous agriculture insurance schemes not only provides subsidised insurance to the loanee farmers but also avails it to the non-loanee farmers.

The new operational guidelines, which come at the onset of the rabi season, which starts from October, also detail a Standard Operating Procedure for evaluation of insurance firms and remove them from the scheme if found ineffective in providing services.

The government has also decided to include perennial horticultural crops under the ambit of PMFBY on a pilot basis.

The scheme provides add on coverage for crop loss due to attack of wild animals, which will be implemented on a pilot basis. Aadhaar number will be mandatorily captured to avoid duplication of beneficiaries.

In order to ensure that more non-loanee farmers are insured under the scheme, the insurance companies are given a target of enrolling 10 per cent more non-loanee farmers than the previous corresponding season.

The new guidelines address the current challenges faced while implementing the scheme by putting forth effective solutions.

"The much demanded rationalisation of premium release process has been incorporated in the new guidelines...This will reduce the delay in settling the claims of farmers," the statement said.