Seminar

On Agriculture Insurance

Under Guidance of Dr. R.S.Pundir

PRESENTED To IABMI, AAU

PRESeNTED By Pandya Na in G. Reg.No. !"#$$%&# '!!(

FLOW OF PRESENTATION
Introduction Objectives History Need of A ricu!ture Insurance in India Wor!d Scenario To "no# t$e %resent status of cro% insurance in India& 'onstraints 'onc!usion Su estion 'om%anies in India References

Introduction
'ro% Insurance is one of t$e ris" miti ation too! in a ricu!ture&

It %rovides insurance covera e and financia! su%%ort to t$e farmers in t$e event of fai!ure of any of t$e notified cro% as a resu!t of natura! ca!amities) %ests * diseases&

It $e!%s to stabi!i+e farm incomes) %articu!ar!y in disaster years&

Objectives
To "no# t$e need of a ricu!tura! insurance in India& To "no# t$e %resent status of cro% insurance in India&

History of 'ro% Insurance In India

S%ecia! study #as conducted by T$e 2inistry of Food and A ricu!ture

,-./0 ,-.1

,-34

T$e (overnment introduced a )ro* Insurance Bill and circu!ated a mode! sc$eme of cro% insurance on com%u!sory basis to constituent State overnments for t$eir vie#s&Non of t$e state ovt& acce%t it&

,-/5

E6%ert 'ommittee $eaded by t$e '$airman) A ricu!tura! Price 'ommission made fu!! e6amination of t$e economic) administrative) financia! and actuaria! im%!ications of t$e subject&

,-/70 ,-/1

T$e (enera! Insurance 8e%artment of Life Insurance 'or%oration of India introduced a 'ro% Insurance Sc$eme on +#" cotton. $(%'# GI) ,as set u*.

,-/-0 ,-1.

Pi!ot 'ro% Insurance sc$eme #as started& In ,9 states it #as im%!emented&

,-140 ,---

T$e ,--/ 0,--1> E6%erimenta! 'ro% Insurance Sc$eme #as 'om%re$ensive 'ro% Insurance Sc$eme:''IS; introduced& :E'IS; #as introduced durin Rabi ,--/0-1 season #$ic$ ,4 States and 7 <Ts im%!emented t$e Sc$eme =$arif #as im%!emented in ,. districts of five States&unti! :,55? ,---& Subsidy;

,--on#ards

NAIS #as started in ,--- and its sti!! oin on@

75590 755.

Farm Income Insurance Sc$eme AI' commenced business from ,st A%ri! 7559 * #as incor%orated on 75t$ 8ec 7557

755.

Rainfa!! based insurance Weat$er based cro% insurance&

Need of A ricu!tura! Insurance

Farmin is main!y de%ended on #eat$er&

Farmers face f!oods) drou $t) %ests) disease) and a %!et$ora of ot$er natura! disasters& T$e #eat$er is t$eir reatest adversary) somet$in t$at can never be contro!!ed by man&

Over -&. of India is vu!nerab!e to drou $t&

On an avera e) cro% on $' /illion 0ectares of !and are dama ed every year by natura! ca!amities and adverse seasona! conditions) ross!y im%actin t$e !eve! of a ricu!tura! %roductivity

 'ro% insurance is a ris" mana ement too! t$at farmers can use in todayAs a ricu!tura! #or!d& For a %remium) farmers can %ass t$eir ris" onto a t0ird *arty.

Efficient ris" reducin and !oss mana ement strate ies suc$ as cro% insurance #ou!d enab!e t$e farmers to ta"e substantia! ris"s&

Ris"s in A ricu!ture

Production Risks
Weather Risks

Out put Risks

Price Risk
Pest and Diseases Improper Cultivation Practices Policy Risk

'ro% Insurance in Wor!d

Over ,55 countries in t$e #or!d $ave some form of cro% insurance&T$e USA, )anada, Me1ico) and S*ain dominate t$e #or!d cro% insurance mar"et in terms of %remium&

Sr.No )ountry . , <SA 7 'anada 9 P$i!i%%ine s . 4 S%ain India

3 er all Su4sidy . /50/4 /5 /5 ? for !oanee farmers and about 5!. for non# loanee farmers 45035 Started 45? and no# Source2 Raju, S & Chand, ,5? Ramesh(2008),Agriculture Insurance in India

Ta4le $

Present Status of 'ro% Insurance In India

NAIS
In India National Agricultural Insurance Sc0e/e :NAIS; is e6istin since ,---&

Sc$eme is avai!ab!e to a!! farmers !oanee and non0!oanee bot$ irres%ective of t$e si+e of t$eir $o!din s&'om%u!sory for !oanee farmers and o%tiona! for non0!oanee farmers&

Ti!! Rabi 755- it #as im%!emented in 79 states and 7 <nion Territories&

Indian 'ro% Insurance Scenario for NAIS from RABI ,---07555 TO RABI 75510755-

Tab!e 7 6ARMERS )37ERED )rore ,9&./ AREA 8IN +a.9 )rore 7&,5 PREMIU SUM M INSURED Rs. Rs. )rore )rore ,.1734 ..73 ):AIM ):AI 6ARMERS S M PAID RATI BENE6ITT Rs. 3 ED )rore . )rore ,7393 714 9&43

Source> AI' IN8IA 'ROPS 'OCERE8

Leadin States on t$e basis of Area covered RABI ,---07555 TO RABI 75510755Tab!e 9 STATE AREA 8:ac +a9 PREMIU M 8Rs.)ror e9 45,&1/ 199&4. 949&., /3/&/, ./4&.1 7--&., 995&15 ,5-&7795&34 ,.5&-1 ):AIMS 8Rs.)ror e9 ):AIM RATI3 .

MAD+;A PRADES+ AND+RA PRADES+ RA<AST+AN GU<ARAT MA+ARAS+TRA UTTAR PRADES+ =ARNATA=A )++ATTISGAR+ 3RISSA BI+AR

"'%.'' 7-/&99 741&// 7,/&.7 7,,&,,17&94 ,44&,7 ,,-&.9 -9&55 .4&7/

135&45 ,/37&.3 ,5-.&41 743,&/, ,./3&79

,/,&.4 7,,&.. 95-&/, 999&31 9,5&.3

34-&1/ 775&91 ,9-/&15 .77&4. 7.7&3/ 777&59 .1,&5. 751&44 ,579&17 /73&77 Source> AI'

6ar/ers co ered >6ar/ers Benefited RABI $(((#'!!! T3 RABI '!!&#'!!(

FAR2ERS 'OCERE8 FAR2ERS BENEFITTE8 6 A R : M a E c R S 745 774&44 755 ,45 ,55 45 ,1-&7 ,39&, ,97&4,75&.4 -,&-1 -,&// -,&5/ /7&.9 9-&54 99&3 9,&-7 9,&/ 9,&99 91&,4 RADASTHAN STATES /5&-7 4/&43

,3&94 ,7&/- ,7&9 WEST BEN(AL Source> AI' IN8IA

5 2AHARASHTRA

Leadin States on t$e basis of Premium RABI ,---07555 TO RABI 75510755STATE PREMIUM 8Rs. )rore9 SUM INSURED 8Rs. )rore9 Tab!e . ):AIM RATI3 . 7,,&.. 999&31 ,/,&.4 9,5&.3 95-&/, .77&4. 775&91 751&44 75,&.3 /73&77 Source> AI'

AN8HRA PRA8ESH (<DARAT 2A8HEA PRA8ESH 2AHARASHT RA RADASTHAN =ARNATA=A <TTAR PRA8ESH ORISSA WEST BEN(AL BIHAR
PRE2I<2 RATES

&??.5" /3/&/, 45,&1/ ./4&.1 949&., 995&15 7--&., 795&34 7,7&5, ,.5&-1

7-957&,. ,145,&-, ,3-39&., ,7.//&-. ,7/35&39 ,59//&1. ,.3-1&3. -74/&57 357,&.377/&9/

Leadin States in '!aim Ratio RABI ,---07555 TO RABI 75510755-

Tab!e 4 STATE AREA IN +a. 8:ac9 PREMIU M 8)rore9 ):AIMS PAID 8)rore9 ):AIM RATI3 . /73&77 .44&14 .77&4. .7,&,5 999&31 9,5&.3 95-&/, 719&4/ 794&,4 79.&9. AI'

BI+AR <+AR=+AND =ARNATA=A TAMI:NADU GU<ARAT MA+ARAS+TRA RA<AST+AN UTTRAN)+A: =ERA:A +IMA)+A: PRADES+

.4&7/ ,/&9. ,44&,7 9.&95 7,/&.7 7,,&,741&// ,&3, 7&/5 ,&74

,.5&-1 7-&,995&15 ,59&34 /3/&/, ./4&.1 949&., .&/, -&77 7&43

,579&17 ,99&5/ ,9-/&15 .93&45 743,&/, ,./3&79 ,5-.&41 ,9&91 7,&31 3&5,

Source> A erage area, su/ insured, *re/iu/ *aid and inde/nities clai/ed under NAIS 4y states

@eat0er Based )ro* Insurance Sc0e/e

It #as first im%!emented by I'I'I FLombard (enera! Insurance 'o Ltd& 8urin 75590755.&

T$e sc$eme is im%!emented by bot$ (ovt&and %rivate com%anies&

T$e %i!ot Weat$er Based 'ro% Insurance Sc$eme :WB'IS; im%!emented durin =$arif 755-&

T$e %i!ot is %ro%osed to be im%!emented in t#enty States&

Accordin to t$e overnment0run A ricu!ture Insurance 'om%any ,&7 mi!!ion farmers in t$e country $ave o%ted for #eat$er0based cro% insurance&

'onstraintsGProb!ems
T$e %remium rates are very $i $ t$ey ran e bet#een ,&4? and above 75? de%endin on t$e cro% and season&

Started at 5!. in t0e 4eginning) t$e %resent rate of %remium subsidy is Aust $!. #$ereas deve!o%ed countries !i"e t$e <S and 'anada %rovide a %remium subsidy of -!. to %!. to a!! farmers&

'!aim sett!ement time is more& 8e!ay in %ayment of c!aims on account of !ate submission of yie!d data) s$are of funds by 'entreGState and dis%utes in t$e c!aims&

Lar er unit area resu!ts in unrea!istic assessment of cro% !oss and %ayment of com%ensation&

 Litt!e interest is s$o#n by Ban"s in t$e im%!ementation of t$e sc$eme Lo# a#areness of t$e sc$eme at t$e round !eve!& Tendency of /oral 0aBard tem%ts an insured individua! to ta"e !ess care in %reventin t$e !oss t$an an uninsured&

'onc!usion
On!y $5. of t$e countryHs farm $o!din s :in terms of area; #ere covered under t$e NAIS in t$e 7551 cro% year a!t$ou $ t$e sc$eme #as !aunc$ed in ,---0 7555& Insurance cover is main!y based on !ar er area a%%roac$ :Homo eneous area;& 2ad$ya Prades$ is !eadin state in terms of area coveredGfarmer i&e& '.-$ areaGfarmer:$a;& '!aims %aid %er farmer are more in (ujarat and c!aims %er $ectare is more in Bi$ar i&e& Rs.'%&5.$ and Rs.''-$.5" res%ective!y& A * N is!ands $avin !o#est c!aim ratio i&e&$&.$!. '!aim Ratio is more t$an ,55? e6ce%t 3 states& Lo# subsidy rates as com%are to ot$er countries&

Su

estion

Reduction in Insurance unit area s$ou!d be done as individua! basis of farmer is not %ossib!e due to sma!! $o!din s of farm and unavai!abi!ity of %revious year data&

Indemnity %ercenta e s$ou!d be increased from 35? to /5 or more&

Pro%er advertisement is reIuired to ma"e farmers a#are about t$e benefits of cro% insurance&

Private %!ayers s$ou!d be encoura ed to jum% in t$is business&

Post $arvest insurance coverin sc$eme s$ou!d be deve!o%ed&

'om%anies Invo!ved
A ricu!ture Insurance 'om%any of India Limited Ne# India Assurance 'o&Ltd& Orienta! Insurance 'o&Ltd& Nationa! Insurance 'o&Ltd <nited India Insurance 'o&Ltd I'I'I Lombard (enera! Insurance 'om%any Ltd IFF'O0To"io (enera! Insurance 'oma%ny Ltd& '$o!amand!am (enera! Insurance

References
Agriculture Insurance Company of India Ltd (2010), http:// (accessed on "/1/200#)! !aicofindia!org

$ i%edi, Amit (200#),&Crop Insurance is the life insurance scheme for farmers& Agriculture 'oday, pp ()! *rashad, +! (200#),Agriculture Insurance Company Ltd, Agriculture ,Industry -ur%ey %ol 1#, .o 2, pp ()/(0! *rashad, *rana% (200#),ICICI Lom1ard 2eneral Insurance Co Ltd! Agriculture ,Industry -ur%ey %ol 1#, .o 2, pp ((/(3! 4a5u, - , Chand, 4amesh(200"),&Agriculture Insurance in India *ro1lems , *erspecti%es& (a%aila1le at http:// !ncap!res!in/upload6files/others/oth617!pdf) (accessed on 10/1/200#)! 4ao, *, -! (200#),&Actuarial area approach on8t address crop insurance pro1le ms&(a%aila1le at http:// !dnaindia!com/!!!/comment6actuarial/approach/ on/ t/address/crop/insurance/pro1lems61(1(000)(accessed on 11/1/200#)! 4ao, *anduranga (200#), .ational Insurance Company Ltd, ,Industry -ur%ey %ol 1#, .o 2, pp (7/()!

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