Insurance companies have already earned about Rs.16,000 crore in three seasons.
The much-hyped Pradhan Mantri Fasal Bima Yojana (PMFBY) – supposed to provide insurance protection to farmers against crop losses due to natural events – has turned into a bonanza for insurance companies while farmers are angry over delays in claim settlement, rejections and paltry compensation. Launched in 2016, four full seasons have passed since and the financial transactions show earnings of insurance companies reaching almost Rs.16,000 crore from the first three seasons, kharif 2016, rabi 2016-17 and kharif 2017. Although the rabi 2017-18 season is over yet over two months later, claim settlement is still not complete.
This and other interesting details of this costly scheme are revealed in a reply given by Gajendra Singh Shekawat, minister of state in the agriculture ministry, to a question (#1170) posed by MP Jharna Das Baidya.
The scheme works like this: farmers give some premium while the balance is given in equal parts by state govts. and the central govt. All this premium goes to the 13 insurance companies involved in providing crop insurance which includes a few public sector companies too but is dominated by private companies. Then, at the harvesting time, farmers file claims for insurance pay-out, companies test their claims and ultimately fork out the money.
In 2016-17, over the two crop seasons, a total of Rs.22,571 crore was collected as premium, of which about 19% was from farmers directly and the remaining 81% was equally shared between state and central govts. Compensatory insurance pay out on the basis of accepted claims was Rs.15,350 crore. That left the insurance companies with a neat gross profit of Rs.7201 crore. The rate of return is thus about 32%.
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