Lok Sabha Question No. 2281 (UNSTARRED), answered on 2022-12-20
Subject: Irregularities of Insurance Companies
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Hibi Eden

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

## LOK SABHA UNSTARRED QUESTION NO. 2281

TO BE ANSWERED ON THE 20 TH  DECEMBER, 2022

## IRREGULARITIES OF INSURANCE COMPANIES

2281  SHRI HIBI EDEN:

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

- (a)  whether  the  Government  has  noticed  the  irregularities  by  private  insurance companies in settling insurance claims with farmers under the Pradhan Mantri Fasal Bima Yojana (PMFBY) and if so, the details including the amount involved, company wise;
- (b)  whether  this  leads  to  the  conversion  of  the  scheme  only  beneficial  for  private insurance companies to reap huge profits and if so, the details thereof;
- (c) whether the Government has any comparative data regarding insurance settlements  by  Public  Sector  Insurance  Companies  and  Private  Sector  Insurance Companies  under  the  PMFBY,  if  so,  the  details  thereof  and  if  not,  the  reasons therefore; and
- (d) whether the Government is in receipt of petitions regarding the same and if so, the details thereof?

## ANSWER

MINISTER OF AGRICULTURE AND FARMERS WELFARE कृ िष एवं कसान कयाण मंी (SHRI NARENDRA SINGH TOMAR)

- (a)  to  (d)  :    All  the  major  work  relating  to  the  assessment of  crop  yield/crop  loss  for calculation of  admissible  claims  under  Pradhan  Mantri Fasal Bima Yojana (PMFBY) are being performed by the concerned State Government or Joint Committee of State Government  officials  and  concerned  insurance  company.  However,  discrepancy  in yield data & consequent disputes between State Government  and insurance companies,  delay  in  providing  Government  share  of  funds,  non-deployment  of sufficient  personnel  by  insurance  companies  etc.,    have  been  received,  which  have been  suitably  addressed  by  the  concerned  State  Government,  Insurer  and  the Ministry.

As  regards  profit  and  loss  of  insurance  companies,  most  of  the  general  insurance companies  except  Agriculture  Insurance  Company  of  India  Ltd.  (AIC)  are  doing different types of businesses/policies.  Thus overall profit/loss of these companies is due  to  profit/loss  in  overall  underwriting  business  of  the  company.    However,  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.  As per provisions of the PMFBY/RWBCIS,  premium  from  farmers  alongwith  Central  and  State  Government share in premium subsidy is paid to the concerned insurance company for acceptance of risk and payment of claims.    Insurers save premium in good seasons/years and pay high claims, if any in bad years from the savings made in the good years.

Further, difference between premium collected and claims paid may not be the margin/profit for the insurance companies.  The cost of reinsurance and administrative cost totalling  10% to 12% of gross premium also has to be borne by the Insurance Companies.  Further, out of the total crop insurance business under the scheme about 50%  is  shared  by  the  5  Public  Sector  insurance  companies  including  Agriculture Insurance  Company  of  India  Ltd.      Coverage  details  of  Public  Sector  and  Private Sector General Insurance Companies are given below :

| Insurance Company Type   | Farmer Applications Enrolled (in lakh)   | Gross Premium (Rs. in crore) Collected by the company   |
|--------------------------|------------------------------------------|---------------------------------------------------------|
| PSU                      | 2,132                                    | 94,436                                                  |
| Private                  | 2,238                                    | 93,136                                                  |

To better resolve all the grievances within the scheme and in order to operationalise a pan-India single telephone number based portal to handle all grievances from end to end, Beta version of the portal has been launched in Chhattisgarh on 21.07.2022 on pilot basis.  It is equipped with the necessary features viz., Complaint/Query capturing through  multiple  modes,  farmer  authentication  &  online  ticket  forwarding  to  the concerned  company,  online  escalation  as  per  escalation  matrices,  updating  of resolution details, MIS & Dashboards for data analysis. The Portal captures the details of  the  grievances  and  then  forwards  it  to  the  concerned  Insurance  Company  for resolution.    It  has  API  based  connectivity  to  the  insurance  companies  so  that  the farmer can directly have access to all information from the portal rather than obtaining the  same  from  the  Insurance  Companies.  The  system  has  been  well  designed ensuring that every grievance is taken to logical conclusion to the satisfaction of the farmer.  Every  grievance  will  have  a  Ticket  ID  with  ticket  closure  responsibility  lying with the Insurance Company with defined turnaround time.

Further,  a  provision  of  Stratified  Grievance  Redressal  Mechanism  viz.  District  Level Grievance Redressal Committee (DGRC), State Level Grievance Redressal Committee  (SGRC)  has  been  made  in  the  Revised  Operational  Guidelines  of  the Scheme  to  resolve  such  complaints.        The  concerned  State  Governments  take suitable punitive action against the defaulting insurance companies.

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