Social Insurance

Crop Insurance

Crop Insurance aims at supporting sustainable production in agriculture sector by following ways:

Providing financial support to farmers suffering crop loss/damage arising out of unforeseen events.
Stabilizing the income of farmers to ensure their continuance in farming.
Encouraging farmers to adopt innovative and modern agricultural practices.
Ensuring flow of credit to the agriculture sector; which will contribute to food security, crop diversification and enhancing growth and competitiveness of agriculture sector besides protecting farmers from production risks.

With the implementation of Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Program (RWBCIS), the crop insurance industry has witnessed a tremendous increase in the premium with modest increase in number of farmers as well as in area. Government of India is now focussed to enrolment of 40% of farmers in coming year and finally to 50% enrolment next year. Looking into the demands of the crop insurance industry we have tried to provide a one stop solution to all needs. Crop Insurance consists of folliwng two programs

Pradhan Mantri Fasal Bima Yojana (PMFBY).
Restructure Weather Based Crop Insurance Scheme (RWBCIS).

Pradhan Mantri Fasal Bima Yojana (PMFBY)

With PMFBY, India witnessed a complete change in policy towards Crop Insurance by making yield based crop insurance program a premium based subsidy scheme as compared to previous system of claim based subsidy scheme. With the help of financial support from Government, PMFBY can help farmers in stabilizing their income to take further risks in Agriculture.

PMFBY envisages many new ideas such as utilizing satellite imagery, vegetation indices etc. coupled with the mandatory usage of smart phones for accurate estimation of crop production at Gram Panchayat level.

Coverage of Risks and Exclusions:

Following stages of the crop and risks leading to crop loss are covered under the scheme.

Prevented Sowing/ Planting Risk

Insured area is prevented from sowing/ planting due to deficit rainfall or adverse seasonal conditions

Standing Crop (Sowing to Harvesting)

Comprehensive risk insurance is provided to cover yield losses due to non- preventable risks, viz. Drought, Dry spells, Flood, Inundation, Pests and Diseases, Landslides, Natural Fire and Lightening, Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane and Tornado.

Post-Harvest Losses

coverage is available only up to a maximum period of two weeks from harvesting for those crops which are allowed to dry in cut and spread condition in the field after harvesting against specific perils of cyclone and cyclonic rains and unseasonal rains.

Localized Calamities

Loss/ damage resulting from occurrence of identified localized risks of hailstorm, landslide, and Inundation affecting isolated farms in the notified area.

General Exclusions

Losses arising out of war and nuclear risks, malicious damage and other preventable risks shall be excluded.

Crops and Premium Structure

The rate of Insurance Charges payable by the farmer will be as per the following table.

Sr. No. Season Crops Maximum Insurance charges payable by farmer (% of Sum Insured)
1 Kharif All food grain and Oilseed crops (all Cereals, Millets, Pulses and Oilseed crops) 2.0% of SI or Actuarial rate, whichever is less
2 Rabi All food grain and Oilseed crops (all Cereals, Millets, Pulses and Oilseed crops) 1.5% of SI or Actuarial rate, whichever is less
2 Kharif and Rabi Annual Commercial / Annual Horticultural crops 5% of SI or Actuarial rate, whichever is less

Restructured Weather Based Crop Insurance Scheme It is found that temperature, rainfall and relative humidity can affect the crop growth. With index based parametric covers, we can now provide covers against increase or decrease in temperature, excess and deficit rainfall, High RH, High Wind Speed etc. There are sufficient numbers of studies which substantiate the relationship of weather parameters with that of production as well as quality of the produce. Weather index insurance offers a comprehensive policy to deal with adversely changing climatic reasons. This a index based product that covers the losses to the crop occurring due to varying weather conditions such as temperature, wind speed, rainfall, humidity etc. Usually below mentioned two costs can be covered under this policy.

Cost of input - Covers the diminished agricultural output/yield resulting due to deviation from optimum weather requirement of a crop within a specific geo graphical location and specified time period.
Increased operational costs of agricultural or non-agricultural economic activity resulting from deviation of Observed Weather index from Strike index.

Main Features

Peril Identification

Peril identification involves appreciation of agronomic properties of the crops or nature of the economic activity. Detailed correlation analysis is carried out to ascertain the way weather impacts crop yield/output of other economic activities.

Index Setting

In Weather Insurance, the claim is settled on the basis of a transparent index. The index is created by assigning weights to critical periods of crop growth. The past weather data is mapped on to this index to arrive at a normal threshold index. The actual weather data is then mapped to the index to arrive at the actual index level. In case there is a material deviation between the normal index and the actual index, compensation is paid out to the insured on the basis of a pre-agreed formula.

Back Testing for Payouts

In order to ensure the robustness of the structure, the normal index is extensively tested based on historical data to ascertain if the payouts made on the basis of the chosen indices would have adequately indemnified the loss in the past or not.

Pricing

Pricing is determined based on components of expected loss, volatility of historical losses, and management expenses.

Monitoring

This entails collection of weather data during the policy period and concurrent assessment of the ground conditions.

Claims Settlement

The claim settlement is a hassle-free process, as the beneficiary is not required to file a claim for loss to receive a payout. Instead insurance company will compensate the beneficiary at the end of the crop season for any deviations from the normal conditions on the basis of the data collected from an independent source accessible to all, like a local weather station, thus removing the need for carrying out field surveys.

Cattle Insurance

The Policy covers the persons having cows, bullocks or buffaloes of either sex certified as being in sound and perfect health and free from injury or disease by a veterinary doctor / surgeon. Though cattle policies are available in retail segment ye insurers give more emphasis on large policies where a critical mass can be obtained from one sourse and risk can be distributed. Hence, Cattle Insurance is now-a-days is conveniently available for members (in groups) of Micro Finance Institutions, Non Government Organisations, Government Sponsored Organisations and such affinity groups / institutions in rural and social sector.

Features of the policy

Death of cattle

Covers the cattle insured whilst within a geographical area specified in the policy schedule, in case of loss of life accident or diseases contracted or surgical operation. The policy also covers death of cattle which are the subject matter of insurance occurring outside the said geographical area in the event of drought, epidemics and other natural calamities.

Optional Benefits

Permanent disability Cover

Covers the risk of permanent and total disablement of cattle.

Exclusions

Malicious or wilful misconduct or neglect, over loading, unskilled treatment.
Use of animal for purpose other than stated in the proposal form without the consent of the Company in writing.
Intentional acts or gross negligence.
Failure to prevent death of cattle.
Accidents occurred or diseases contracted prior to commencement of risk. Disease contracted within 15 days from commencement of policy period.
Transit by air or sea.
Intentional slaughter. slaughter unless it has been directed by a veterinary doctor or a proper governmental authority.

Documents required for purchasing an Insurance Policy

A duly filled & signed proposal form.
Certificate by veterinary doctor in the prescribed form confirming the health status and market value of the animal.
Receipt of payment made while purchasing the animal.
Photograph of the animal.

Claim Process

Claims shall be assessed and paid on the basis of the relevant documents submitted to the Company. The policy will be considered for payment on production of following documents.
Duly completed claim form.
Death certificate from a qualified veterinary surgeon.
Ear tag/RFID ear Tag/RFID chip etc.

Health Insurance

Rashtriya Swasthya Bima Yojna (RSBY)

Objective

Provide protection to BPL households from financial liabilities arising out of health shocks that involve hospitalisation.

Eligibility and Coverage

Beneficiaries under RSBY are entitled to hospitalisation coverage up to ₹30,000 for most of the diseases that require hospitalisation.
Government-fixed package rates for the hospitals for a large number of interventions.
Pre-existing conditions are covered from day one and there is no age limit.
Coverage extends to five members of the family, which includes the head of the household, spouse and up to three dependents. Beneficiaries need to pay only `30 as registration fee while central and state government pays the premium to the insurer selected by the state government on the basis of a competitive bidding.

Key features of RSBY

RSBY provides the participating BPL household with the freedom of choice between public and private hospitals and makes him a potential client worth attracting on account of the significant revenues that hospitals stand to earn through the scheme.

The scheme has been designed as a business model for a social sector scheme with incentives built for each stakeholder. Various stakeholders in the scheme are Government, Insurance Companies, Hospitals, Intermediaries and TPAs.

Enrollment Process for Beneficiaries

An electronic list of eligible BPL households is provided to the insurer using a pre-specified data format. An enrolment schedule for each village, along with dates, is prepared with the help of the district level officials.

As per the schedule, the BPL list is posted in each village at the enrolment station and prominent places prior to the enrolment and the date and location of the enrolment in the village is publicised in advance. Mobile enrolment stations are set up at local centres (e.g., public schools) at each village.

These stations are equipped with the hardware required to collect biometric information (fingerprints) and photographs of the members of the household covered, and a printer to print smart cards with photo.

The smart card, along with an information pamphlet describing the scheme and the list of hospitals, is provided on the spot once the beneficiary has paid the registration fee. The process normally takes less than ten minutes. The cards are handed over in a plastic cover.

A government officer - Field Key Officer (FKO) needs to be present and must insert his/her own, government-issued smart card to verify the legitimacy of the enrolment. (In this way, each enrolee can be tracked to a particular state government official).

In addition to the FKO, an insurance company representative / smart card agency representative must be present. At the end of the each day of enrolment, the list of households that have been issued smart cards is sent to the state nodal agency. This list of enrolled households is maintained centrally and is the basis for financial transfers from the Government of India to the state governments. This list of enrolled households is maintained centrally and is the basis for financial transfers from the Government of India to the state governments.

RSBY has a provision whereby an insurer has to hire intermediaries (e.g. NGOs, MFIs, etc.) to provide grassroots outreach and assist members in utilising the services after enrolment.