Crop insurance is meant to be a mechanism to help farmers cope with the problem of crop losses due to excessive rain or drought, cyclone, diseases, insects, etc.
Numerous national crop insurance schemes have been introduced by the Government of India during the past five decades. The most recent of them are the Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather Based Crop Insurance Scheme (RWBCIS), both launched in 2016.
Under PMFBY, farmers pay 2 percent of the sum insured as premium in the kharif season and 1.5 percent in the rabi season for paddy and wheat. They pay 5 percent for other crops in both seasons. The remaining premium amount is shared equally by the central and state governments.
Available data show that during the past seven years since these two schemes were launched, the biggest beneficiaries have been the capitalist companies that have expanded their crop insurance business.
Table 1 shows the proportion of farmers who grow paddy and wheat who suffered crop losses during 2018-19, and the proportion of farmers who availed of crop insurance. While more than 35 percent experienced crop losses, less than 10 percent benefited from crop insurance.
Table 1: Proportion of farmers with crop losses / availing insurance
| 2018-19 | Paddy
(Kharif) |
Wheat (Rabi) |
| Percent of Ag Households incurring crop losses | 38.4% | 35.1% |
| Percent of Ag Households availing crop insurance | 8.3% | 6.8% |
| Source: Situation Assessment Survey, 2018-19; NSS 77th Round | ||
Table 2 shows the premiums which have been collected and the claims of farmers that have been settled and paid by insurance companies during the past seven years. It can be seen that insurance companies have received Rs 1,97,657 crore as premium during the past seven years. They have paid around Rs 1,40,036 crore to farmers in claims during this period. The difference, which is the profits they have pocketed, amounts to about Rs 57,000 crore.
Table 2: Crop Insurance Premiums Collected and Claims Paid
| Year | Premium (Rupees Crore) | Claims (Rupees Crore) | Difference (Rupees Crore) |
| 2016-17 | 21,950 | 16,827 | 5,123 |
| 2017-18 | 24,468 | 22,088 | 2,380 |
| 2018-19 | 29,698 | 29,337 | 3,61 |
| 2019-20 | 32,362 | 27,373 | 4,989 |
| 2020-21 | 31,690 | 20,771 | 10,919 |
| 2021-22 | 29,598 | 17,881 | 11,717 |
| 2022-23 | 27,901 | 5,761 | 22,140 |
| Source: Ministry of Agriculture and Farmers Welfare | |||
The leading companies involved in the crop insurance business are Reliance General Insurance, ICICI Lombard, IFFCO Tokio, New India Assurance, Universal Sompo, Bajaj Allianz and SBI General Insurance Company. Other than SBI General Insurance and New India Assurance, the remaining five are privately owned companies.