Lok Sabha Question No. 115 (UNSTARRED), answered on 2018-12-11
Subject: Reduction of Premium of PMFBY
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: RAM KUMAR SHARMA KUSHWAHA

O.I.H

## GOVERNMENT OF INDIA MINISTRY OF AGRICULTURE AND FARMERS WELFARE DEPARTMENT OF AGRICULTURE, COOPERATION AND FARMERS WELFARE

## LOK  SABHA

## UNSTARRED QUESTION NO. 115

TO BE ANSWERED ON THE 11 TH  DECEMBER, 2018

## REDUCTION OF PREMIUM OF PMFBY

115.   SHRI  RAM  KUMAR SHARMA:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंी be pleased to state:

- (a) whether there is a need to reduce the amount of premium being charged from farmers under Pradhan Mantri Fasal Bima Yojana (PMFBY);
- (b) if  so,  the  reaction  of  the Government in this regard;
- (c) whether the insurance companies of public  and private  sectors are earning profit  more than  the  justifiable  amount under the said scheme; and
- (d) if so, the details of the total amount of premium charged along with the profit earned by the Insurance companies during the last two years in this regard?

## ANSWER

MINISTER OF STATE IN THE MINISTRY OF AGRICULTURE AND FARMERS WELFARE कृ ष एवं कसान कयाण मंालय म राय मंी (SHRI  PARSHOTTAM  RUPALA)

(a) & (b): Under Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based  Crop  Insurance  Scheme  (RWBCIS),  the  premium  payable  by  farmers  has  been substantially  reduced  and  simplified  and  there  is  one  premium  rate  on  pan-India  basis  for farmers  which  is  maximum  1.5%,  2%  and  5%  of  sum  insured  for  Rabi,  Kharif  and  annual horticultural / commercial crops, respectively.

(c) & (d):       Crop insurance is a major  risk mitigation tool for the benefit of farmers.  Insurance is  all  about  spreading the  risk over  the  period  and  over  the  area.    Insurers  save  premium  in good seasons/years and  pay  high claims, if any,  in  bad  years  from  the  savings  made  in  the good years. As against the premium collected from farmers amounting to Rs.4216.04 crore in 2016-17,  claims  of  Rs.  16279.25  crore  have  been  paid  to  farmers.    Similarly,  claims  of Rs.16967.92  crore  have  been  paid  during  2017-18  (Kharif  2017)  against  premium  collected from  farmers  amounting  to  3038.70  crore.      Details  of  the  premium  received  by  insurance companies and claimed paid to the farmers during last three seasons is as under.

(Rs. in Crore)

| Season                   |   Gross Premium received |   Farmers contribution in Gross Premium |   Total Claims |
|--------------------------|--------------------------|-----------------------------------------|----------------|
| 2016-17                  |                  22345.5 |                                 4216.04 |        16279.2 |
| 2017-18 (Kharif'17 only) |                  19767.5 |                                 3038.7  |        16967.9 |

Inspite of overall good monsoon during first two years of implementation of PMFBY, the claim  ratio  during  2016-17  is  about  73%  and  during  Kharif  2017,  it  is  about  86%.  Moreover, administrative and other cost for insurance company for implementation of the scheme ranges from 10-12%. Moreover, administrative and other cost for insurance company  for implementation of the scheme ranges from 10% to 12% of gross premium. Further, the farmers in  most  affected  areas/States  received  higher  claims  and  the  claim  ratio  was  high  in  these States  viz.  Kerala  210%  and  Karnataka-132%,  during  Kharif  2016,  Tamil  Nadu  -  287%  and Andhra Pradesh 159% during Rabi 2016-17.  Similarly during Kharif 2017, the higher claim ratio is in the States of Chhattisgarh - 425%, Haryana - 201%, Madhya Pradesh - 135% and Odisha - 204%.

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