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Friday, June 14, 2024
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Insuring Farmers Future

L.Narayana & K.Naveen

United India Insurance which started implementing the insurance scheme from Kharif 2016 was able to cover 60 lakh farmers in eight states has included three more states in the current season with an objective of enabling the farmers to mitigate their crop and property risk through insurance


India lives in its villages. With 18 million of households representing 45% of India’s workforces are living in rural India, no one would disagree with the economic or political importance of improving their lot.


The base of the rural pyramid has low income levels and depends on agriculture. At Rs.23.72 trillion the sector is made up of about 17.4% of the country’s GDP in 2016-17. But the share of GDP from Agriculture is falling steadily over the years.


There are enough anecdotes of even affluent farmers who do not want their sons to follow them into the traditional occupation due to poor terms of the trade. Data indicates that the economics of the farmer has clearly deteriorated with the share of agriculture in rural employment falling over the years.


The agricultural sector is exposed to a variety of risks which occur with high frequency and cause highly variable production outcomes.


Risk Factors

  • climate and weather risks,
  • natural catastrophes
  • pest and diseases
  • Production risks


Production risks are exacerbated by price risks, credit risks, technological risks and institutional risks. Risk management in agriculture ranges from informal mechanism like avoidance of highly risky crops, diversification across crops and across income sources to formal mechanisms like agriculture insurance, minimum support price system and future’s markets.


Our Prime Minister wants to double farmers income by 2022 and ensure gainful employment for this huge workforce. There has been a holistic and concrete drive by the government apparatus to improve agriculture yields by optimizing delivery of inputs, enabling better price discovery for farmers and protecting them from risk by way of improved insurance coverage.


The introduction of Pradhan Mantri Fasal Bima Yojana(PMFBY) has been a game changer in the risk mitigation of farmers to a great extent. The Government has envisioned to bring 50% gross cropped area in the country under crop insurance by 2018-19 and target for 2017-18 is 40% of GCA (Gross Cropped Area).


Under erstwhile crop insurance schemes, insured area hovered around 20% of GCA and the farmers’ premium was high in NCIP. There was also inadequacy in risk coverage due to capping on premium – Sum Insured reduced.


  • High variability in farmers’ premium rate between neighboring districts, for different crops within the same district and top of it the inordinate delay in settlement of claims.


  • Farmer share of premium- One Season One Rate
    • Rabi-1.5%
    • Kharif-2%
    • 5% -Annual Commercial/Horticultural Crops

Balance of actuarial premium is subsidized by central and state governments on 50 : 50 basis.


The coverage for farmers has increased since the capping on premium removed thus no reduction in sum insured/claimed.  The sum insured is equated to scale of finance, ensuring adequate claim. Inundation has been included in category of “Localized Calamities”. Area applicability of “Post Harvest Losses” has been extended to throughout country which in the earlier scheme was only for coastal areas.

The scheme has also provisions for prevented sowing and failure of sowing / planting / germination, “On Account” Payment of Claims due to mid-season adversity, localized risks, post-harvest Loss.


Implementation of PMFBY


United India Insurance has been implementing the scheme from Kharif 2016 season and in the first year of operation more than 60 lakhs farmers were insured under PMFBY & RWBCIS schemes covering eight states namely Rajasthan, Bihar, West Bengal, Gujarat, Odisha, Karnataka, Kerala and Puducherry. In the current season we are implementing the scheme in Maharashtra, Telenagana, Karnataka and Rajasthan.


In order to increase the penetration of crop insurance CSCs, agents were involved for the procurement of Non-Loanee business. Publicity and awareness campaigns were carried out through Jingles in Prasar Bharathi, advertisements in the local daily newspapers, conducting awareness camps in agri-melas etc.,




  • Lack of historical data at IU level for pricing and risk analysis. Delay in issue of notification and thereby leading to a short marketing window to take forward the scheme to Non loanee farmers.
  • Slow adoption of technology during conduct of CCEs using Smart Phone App and timely submission of CCE data.
  • Manipulation of CCEs data and leakages in few areas.
  • Late receipt of proposal forms beyond the cut-off date
  • Lack of advance intimation about conduct of CCEs for facilitating co-observation by insurance companies


Technology Employed


We have been using remote sensing to analyze crop type and spread for better crop health monitoring in selected clusters. LAI/NDVI based crop health monitoring to assess the crop growth and performance during growth phase is also employed to rule out the manipulation of CCEs. Remote controlled drones are also employed to do micro level crop survey for localized calamity and monitor crop health


United India’s Farmers Package Policy:

Farmer’s Package Policy is designed to take care of the insurance needs of a farmer. It covers both the personal assets of the farmer like the dwelling and its contents both against fire & theft and also the assets which help him in earning his livelihood.


Fire and allied perils for building and contents

Fire and allied perils for farm produce (stocks kept in open not covered)


Pedal Cycle

Accident cover

Tiny Sector and Village and Cottage Industries


Agriculture Pumpset

Animal Driven cart

Agriculture Tractor





As a leading public sector company in Micro, Rural cum Crop Insurance Portfolio, United India Insurance is determined to achieve Government’s objective of  50% gross cropped area in the country under Crop Insurance by 2018-19. The company with its 16,345 workforce employed in 2473 offices spread across the country is striving its best to reach out the nook and corner of the country to enable farmers to mitigate their crop and property risk through insurance.


(The authors are the Chief Manager and Administrative Officer of United India Insurance Co. Ltd. Views expressed are their personal.)