The Centre on Friday told Parliament that private insurance companies have not made "windfall gains" under the Pradhan Mantri Fasal Bima Yojana (PMFBY) as the overall claim ratio between 2016-17 and 2018-19 was as high as 81 per cent.
Agriculture Minister Narendra Singh Tomar, in his written reply to the Rajya Sabha, also made it clear that the difference between premium collected and claims paid is not the margin or profit for these firms. The reinsurance and administrative cost totalling 10 to 12 per cent of gross premium also has to be borne by the insurance companies.
The government is implementing two crop insurance schemes of the PMFBY and the Restructured Weather Based Crop Insurance Scheme (RWBCIS).
According to provisions of the PMFBY and the RWBCIS, the minister said premium from farmers along with central and state government share in premium subsidy is paid to the concerned insurance company for acceptance of risk and payment of claims as per provision of scheme.
"Insurers save premium in good seasons/years and pay high claims, if any in bad years from the savings made in the good years," he said adding that crop is all about spreading the risk over the period and over the area.
In spite of overall good monsoon during first three years of the implementation of PMFBY, the claim ratio during 2016-17, 2017-18 and 2018-19 was about 77 per cent, 86 per cent and 80 per cent (provisional), respectively, he said.
Tomar further said that overall claim ratio for the three years combined (2016-17, 2017-18 and 2018-19) comes to about 81 per cent. "But, the farmers in most affected areas/states received higher claims."
"Hence, it is not correct to say that private insurance companies have made windfall gains under the Pradhan Mantri Fasal Bima Yojana (PMFBY)," the minister said.
In this regard, it is also informed that the difference between premium collected and claims paid is not the margin or profit for the insurance companies, he said.
The reinsurance and administrative cost totalling 10 to 12 per cent of gross premium also has to be borne by the insurance companies. Further, out of the total crop insurance business under the scheme, more than 50 per cent is shared by the 5 public sector insurance companies including Agriculture Insurance Company of India Ltd. (AIC), he added.
Placing the data before the Upper House, Tomar said the claim ratio was high at 209 per cent in Kerala, 136 per cent in Karnataka during kharif 2016, while the claim ratio was at 298 per cent in Tamil Nadu and 179 per cent in Andhra Pradesh during rabi 2016-17.
Similarly, during kharif 2017, the higher claim ratio was in the states of Chhattisgarh (452 per cent), Haryana (270 per cent), Madhya Pradesh (161 per cent) and Odisha (217 per cent). During the rabi 2017-18, high claim ratio states were Odisha (226 per cent), Tamil Nadu (148 per cent) and Chhattisgarh (109 per cent), he said.
Though complete data for the kharif 2018 season is not available, high claims ratio has been reported in states of Haryana (140 per cent), Uttarakhand (115 per cent) and Chhattisgarh (124 per cent), he added.
To a query if farmers are indifferent towards PMFBY, the minister replied in negative. "No, sir."
Due to the improved features of PMFBY, the minister said the coverage under the scheme has increased to 30 per cent of the gross cropped area from 23 per cent in 2015-16 under erstwhile schemes.
Participation of non-loanee farmers, for whom the scheme is voluntary, have also increased from 5 per cent under erstwhile schemes to 42 per cent (kharif 2019) under PMFBY showing the voluntary acceptability of the scheme, he said.
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