According to a new study, only 19% of farmers reported ever having insured their crops, with many being unaware of crop insurance.
Of the un-insured, 46% were found to be aware but not interested, while 24% said that the facility was not available to them. Only 11% felt that they could not afford to pay the insurance premium, the study found.
Government to step in
Around 32m farmers have enrolled in crop insurance schemes, with issues in design, particularly related to delays in claims settlement, have led to farmers not being covered, despite significant government subsidy.
“Implementation and technical challenges lie ahead which can be addressed but will require a comprehensive strategy, innovative solutions, and timely roll out,” said DS Rawat, secretary-general of the Associated Chambers of Commerce and Industry of India (Assocham), which commissioned the study.
To address the problems, the government is piloting a modified national agricultural insurance scheme, a market-based scheme with involvement from the private sector.
Compared with the existing scheme, the new program is hoped to offer more timely claim settlement, with less distortion in the allocation of government subsidies and cross-subsidies between farmer groups, and reduced basis risk, Assocham said.
A major step forward
The government’s Farm Income Insurance Scheme will be rolled out soon for the autumn season. Apart from government players, the private sector has developed weather-based crop insurance products.
Rawat added that the shift from a social crop insurance programme with ad-hoc funding from the government to a market-based crop programme with actuarially sound premium rates and product design would be a major step forward.
“The improved product and active involvement of private sector insurance markets are expected to lead to significant benefits for farmers including faster claims settlement, a more equitable allocation of subsidies and lower basis risk,” he said.
New mobile technology could be used to implement crop insurance schemes more effectively, the report added.