India Reduction Premium Tender

Under Pradhan Mantri Fasal Bima Yojana PMFBY and Restructured Weather Based Crop Insurance Scheme RWBCIS the premium payable by farmers has been substantially reduced and simplified and there is one premium rate on pan-India basis for farmers which is maximum 1.5 2 and 5 of sum insured for Rabi Kharif and annual horticultural commercial crops respectively.Crop insurance is a major risk mitigation tool for the benefit of farmers. Insurance is all about spreading the risk over the period and over the area. Insurers save premium in good seasonsyears and pay high claims if any in bad years from the savings made in the good years. As against the premium collected from farmers amounting to Rs.4216.04 crore in 2016-17 claims of Rs. 16279.25 crore have been paid to farmers. Similarly claims of Rs.16967.92 crore have been paid during 2017-18 Kharif 2017 against premium collected from farmers amounting to 3038.70 crore.In spite of overall good monsoon during first two years of implementation of PMFBY the claim ratio during 2016-17 is about 73 and during Kharif 2017 it is about 86. Moreover administrative and other cost for insurance company for implementation of the scheme ranges from 10-12. Moreover administrative and other cost for insurance company for implementation of the scheme ranges from 10 to 12 of gross premium. Further the farmers in most affected areasStates received higher claims and the claim ratio was high in these States viz. Kerala 210 and Karnataka-132 during Kharif 2016 Tamil Nadu 287 and Andhra Pradesh 159 during Rabi 2016-17. Similarly during Kharif 2017 the higher claim ratio is in the States of Chhattisgarh 425 Haryana 201 Madhya Pradesh 135 and Odisha 204.