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Banking & Insurance

Insurence

Crop Insurence


Crop Insurence:

Main Objective is to provide insurance coverage and financial support to the farmers in the event of failure of any of the notified crop as a result of natural calamities, pests & diseases.

This will help to farmers in the following ways:

To stabilize the income of farmers to ensure their continuance in farming.

To encourage farmers to adopt innovative and modern agricultural practices.

To ensure the flow of credit to the agriculture sector.

Crop insurance is purchased by agricultural producers, including farmers, ranchers, and others to protect themselves against either the loss of their crops due to natural disasters, such as hail, drought, and floods, or the loss of revenue due to declines in the prices of agricultural commodities. The two general categories of crop insurance are called crop-yield insurance and crop-revenue insurance.

In India, a multi-peril crop insurance called National Agriculture Insurance Scheme (NAIS) was implemented. This scheme is being implemented by Agriculture Insurance Company of India, an Indian government-owned company. The scheme is compulsory for all farmers who take agricultural loans from any financial institution. It is voluntary for all other farmers. The premium is subsidized for farmers who own less than two hectares of land. This insurance follows the area approach. This means that instead of individual farmers, a specific area is insured.

The area may vary from gram panchayat (an administrative unit containing 8-10 villages) or block or district from crop to crop or state to state. The claim is calculated on the basis of crop cutting experiments carried out by agricultural departments of respective states. Any shortfall in yield compared to past 5 years average yield is compensated.

RISKS:

Following risks leading to crop loss are to be covered under the scheme:

YIELD LOSSES (standing crops, on notified area basis): Comprehensive risk insurance is provided to cover yield losses due to non-preventable risks, such as (i) Natural Fire and Lightning (ii) Storm, Hailstorm, Cyclone, Typhoon, Tempest, Hurricane, Tornado etc. (iii) Flood, Inundation and Landslide (iv) Drought, Dry spells (v) Pests/ Diseases etc.

PREVENTED SOWING (on notified area basis): In cases where majority of the insured farmers of a notified area, having intent to sow/plant and incurred expenditure for the purpose, are prevented from sowing/planting the insured crop due to adverse weather conditions, shall be eligible for indemnity claims up to a maximum of 25% of the sum-insured.

POST-HARVEST LOSSES (individual farm basis): Coverage is available up to a maximum period of 14 days from harvesting for those crops which are kept in “cut & spread” condition to dry in the field after harvesting, against specific perils of cyclone / cyclonic rains, unseasonal rains throughout the country.

LOCALISED CALAMITIES (individual farm basis): Loss/damage resulting from the occurrence of identified localized risks i.e. hailstorm, landslide, and Inundation affecting isolated farms in the notified area.

EXCLUSIONS:

Risks and Losses arising out of following perils shall be excluded:

War & kindred perils, nuclear risks, riots, malicious damage, theft, the act of enmity, grazed and/or destroyed by domestic and/or wild animals, In case of Post–Harvest losses the harvested crop bundled and heaped at a place before threshing, other preventable risks.

Season Crops, Maximum Insurance charges payable by the farmer (% of Sum Insured) :

Kharif Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) 2.0% of SI or Actuarial rate, whichever is less

Rabi Food & Oilseeds crops (all cereals, millets, & oilseeds, pulses) 1.5% of SI or Actuarial rate, whichever is less

Kharif & Rabi Annual Commercial / Annual Horticultural crops 5% of SI or Actuarial rate, whichever is less.

In INDIA there are certain companies which participate in the Government sponsored agriculture /crop insurance schemes based on their financial strength, infrastructure, manpower, and expertise etc. The empanelled private insurance companies at present are

1) ICICI-Lombard General Insurance Company Ltd.

2) HDFC-ERGO General Insurance Company Ltd.

3) IFFCO-Tokio General Insurance Company Ltd.

4) Cholamandalam MS General Insurance Company Ltd.

5) Bajaj Allianz General Insurance Company Ltd.

6) Reliance General Insurance Company Ltd.

7) Future Generali India Insurance Company Ltd.

8) Tata-AIG General Insurance Company Ltd.

9) SBI General Insurance Company Ltd.

10) Universal Sompo General Insurance Company Ltd.

Only these 10 insurance companies are allowed to do crop insurance in India, no other companies are allowed to do crop Insurance.