Lok Sabha Question No. 866 (UNSTARRED), answered on 2023-07-25
Subject: Profits made by Insurance Companies
Ministry: AGRICULTURE AND FARMERS WELFARE
Asked by: Dushyant Singh

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

## LOK SABHA UNSTARRED QUESTION NO. 866

TO BE ANSWERED ON THE 25 TH  JULY, 2023

## PROFITS MADE BY INSURANCE COMPANIES

866.   SHRI DUSHYANT SINGH:

Will the Minister of AGRICULTURE AND FARMERS WELFARE कृ षि एवं ककसान कल्याण मंत्री be pleased to state:

- (a) the details of profits made by insurance companies under Pradhan Mantri Fasal Bima Yojana (PMFBY), company-wise and year-wise;
- (b) the district-wise data of the claim-to-premium ratio ;
- (c) the State-wise data of the percentage of claims due under PMFBY;
- (d) whether  the  number  of  farmers  and  area  of  land  under  the  PMFBY  have  been decreasing and if so, the reasons therefor; and
- (e) the  steps  taken  to  decrease  premium  rates  and  increase  competition  among insurance  companies  and  whether  the  Government  is  planning  to  revamp  PMFBY  to rationalizable premium rates and encourage the participation of more insurers?

## ANSWER

MINISTER OF AGRICULTURE AND FARMERS WELFARE

कृ षि एवं ककसान कल्याण मंत्री

(SHRI NARENDRA SINGH TOMAR)

- (a)    Most of the general insurance companies except Agriculture Insurance Company of India Ltd. (AIC) implementing the Pradhan Mantri Fasal Bima Yojana (PMFBY) 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 spatially & temporally.  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  as  there  is  a  cost  of  reinsurance  and administrative cost which generally range upto 10% to 12% of gross premium.  This cost also  has  to  be  borne  by  the  Insurance  Companies.    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.

(b) to (e) : District level claims data is not maintained at present, therefore, district level premium to claim ratio is not available. Number of farmer applications is increasing under the  scheme. However, after some decline due to the withdrawal of some States, area insured  has  also  increased  from  443  lakh  hectare  in  2021-22  to  487  lakh  hectare  in 2022-23.

Actuarial/bidded  premium  rates  are  charged  by  insurance  companies  but  the farmers have to pay maximum 2% for Kharif, 1.5% for Rabi food and oilseed crops and 5%  for  commercial/horticultural  crops  and  the  balance  of  actuarial/bidded  premium  is shared by the Central and State Government on 50 : 50 basis and 90 :10 in case of North Eastern States (from Kharif 2020 season) and Himalayan States (from Kharif 2023) as per  provisions  of  the  scheme.    Based  on  the  experience  gained,  views  of  various stakeholders  and  with  a  view  to  ensure  better  transparency,  accountability,  timely payment  of  claims  to  the  farmers  and  to  make  the  scheme  more  farmer  friendly, Government has periodically comprehensively revised the Operational Guidelines of the PMFBY to ensure that the eligible benefits under the scheme reach the farmers timely and transparently.

National  Crop  Insurance  Portal  (NCIP)  has  been  developed  for  ensuring  autoadministration, subsidy payment, co-ordination, transparency, dissemination of information  and  delivery  of  services  including  direct  online  enrollment  of  farmers, uploading/obtaining individual insured famer's details for better monitoring and to ensure transfer of claim amount electronically to the individual farmer's Bank Account.

For  transparent  calculation  and  settlement  of  claims  by  insurance  companies, claims module namely, Digiclaim has been developed w.e.f. Kharif 2022 season wherein all the claim are worked out through National Crop Insurance Portal (NCIP) and  paid to farmers accounts using Public Finance Management System (PFMS).

Started  in  2020,  Integration  of  Land  Record  with  NCIP  is  now  complete  for Madhya  Pradesh,  Chhattisgarh,  Andhra  Pradesh,  Maharashtra,  Rajasthan,  Karnataka, Odisha - 90% of the insured area is now being validated through e-land records of the states through land record integration.

The  scheme  envisages  use  of  improved  technology  in  implementation  of  the scheme.  Accordingly, various steps like capturing of yield data/Crop Cutting Experiments (CCEs)  data  through  CCE-Agri  App  &  uploading  it  on  the  NCIP,  allowing  insurance companies to witness the conduct of CCEs, integration of State land records with NCIP etc. have already been taken to improve timely settlement of the claims to farmers have been taken.  Following technologies for Objective Crop Damage & Loss Assessment and transparency have recently been approved for implementation w.e.f. 2023-24 :

-  YES-TECH (Yield Estimation System Based on Technology) for gradual migration to Remote-Sensing based yield estimation to help assess yields as well as fair and accurate  Crop  Yield  Estimation . This  initiative  has  been  launched  for  paddy  & wheat  crops  from  Kharif  2023  wherein  30%  weightage  to  yield  estimation  will mandatorily be assigned to YES-TECH derived yield.
-  WINDS (Weather Information Network and Data System) for Network of Automatic Weather  Stations  (AWS)  &  Automatic  Rain-Gauges  (ARG)  for  collecting  hyperlocal  weather data at GP & Block level.  This will be fed into a National unified network of AWS & ARG with interoperability & sharing of data in coordination with India  Meteorological  Department  (IMD).    WINDS  will  provide  data  not  only  for YES-TECH  but  also  for  effective  drought  &  disaster  management,  accurate weather prediction and offering better parametric insurance products.
-  CROPIC  (Collection  of  Real-time  photos  and  Observations  of  Crops)  for  Geotagged  photographs  for  validation  of  sown  Crop  with  Insured  Crop  and  use  of pictorial analytics for Objective Crop Damage  Assessment  & Crop Yield Estimation.

For  better  operationalisation  of  the  scheme  three  Alternative  Risk  Management models have also been given as an option to the States for the ongoing tender cycle from Kharif 2023.

## Cumulative Details of claims from 2016-17 to 2022-23 under PMFBY (as on 24.07.2023)

| State/UT Name    | Total Claims   | Paid Claims    | Claims Pending   |
|------------------|----------------|----------------|------------------|
|                  | (Rs. in Crore) | (Rs. in Crore) | (Rs. in Crore)   |
| A & N Islands    | 0.235          | 0.233          | 0.002            |
| Andhra Pradesh   | 4838.36        | 4828.13        | 10.22            |
| Assam            | 285.74         | 251.23         | 34.51            |
| Bihar            | 749.37         | 749.37         | 0.00             |
| Chhattisgarh     | 6538.39        | 6504.09        | 34.31            |
| Goa              | 0.14           | 0.14           | 0.00             |
| Gujarat          | 5417.537       | 5376.250       | 41.287           |
| Haryana          | 6720.45        | 6643.95        | 76.50            |
| Himachal Pradesh | 345.16         | 321.59         | 23.57            |
| Jammu &Kashmir   | 96.97          | 93.06          | 3.91             |
| Jharkhand        | 893.81         | 767.96         | 125.85           |
| Karnataka        | 11077.68       | 11059.77       | 17.91            |
| Kerala           | 387.97         | 333.89         | 54.08            |
| Madhya Pradesh   | 28411.42       | 28372.85       | 38.57            |
| Maharashtra      | 27139.48       | 26940.35       | 199.14           |
| Manipur          | 6.87           | 6.49           | 0.38             |
| Meghalaya        | 0.51           | 0.51           | 0.00             |
| Odisha           | 6337.71        | 6268.83        | 68.87            |
| Puducherry       | 30.43          | 28.51          | 1.91             |
| Rajasthan        | 22565.90       | 21137.26       | 1428.64          |
| Sikkim           | 0.67           | 0.67           | 0.00             |
| Tamil Nadu       | 13084.49       | 13061.24       | 23.25            |
| Telangana        | 1845.78        | 1811.67        | 34.11            |
| Tripura          | 5.135          | 5.134          | 0.002            |
| Uttar Pradesh    | 4639.43        | 4559.70        | 79.72            |
| Uttarakhand      | 533.63         | 515.40         | 18.23            |
| West Bengal      | 1222.83        | 1218.52        | 4.31             |
| GRAND TOTAL      | 143176.104     | 140856.819     | 2319.286         |

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## Annexure