A new study on the Pradhan Mantri Fasal Bima Yojana (PMFBY), a crop insurance scheme introduced in April 2016 replacing the National Agriculture Insurance Scheme (NAIS) and the Modified National Agriculture Insurance Scheme (MNAIS), has claimed that increasing number of farmers are becoming indifferent towards it because of the failure of the insurance companies refusing to reach of to the farmers in need.
While in 2016, the year it was launched, as many as 37.13% of the farmers decided to attached to it, the percentage went down during the three successive years to 32.85, 29.19, and 25.73, the study says. Worse, it underlines, the maximum number and proportion of farmers who benefited from the scheme was in the kharif 2016 season (34.69%), which went down to just 7.77% in kharif 2018.
“What is intriguing is that Kharif 2016 saw a good monsoon while the subsequent years, particularly Kharif 2018 were bad monsoon years, i.e. the claim settlement in the good monsoon year outstrips the claim settlement in the relatively worse years”, the study, titled “Flop Scheme: An analysis of the PMFBY in Gujarat”, authored by Persis Ginwalla, and published by the Centre for Financial Accountability, a Delhi-based advocacy group, says, alleging, companies, including MNCs, have been indifferent towards farmers.
Now, unseasonal rains in Gujarat in 2019 and then the cyclonic disturbances of ‘Kyarr’ and ‘Maha’ wreaked havoc on the groundnut crop, so much so that the state government declared a relief package for nearly all the farmers in the state. VKA lost his groundnut crop. At the end of the season, when the damages were calculated, he received a sum of Rs 100 as damages for the crop loss suffered. He is, however, entitled to the entire sum due to him for the crop loss.
The Government of Gujarat (GoG) had then declared an assistance of Rs. 5,800 (upto 2 ha) if the crop loss was more than 33% in the taluka, and in talukas where it was below 33% it gave Rs. 4,000 and the compensation was paid accordingly. That the loss happened is therefore proven and endorsed by the government action. PP, secretary of the cooperative society, did inquire about the sum of the claim settlement but “the Reliance General Insurance Company did not give me an answer when I contacted them. Arvalli district was declared as 33% flood-affected by the GoG so why does the company not accept it?”
The companies may claim that they are/were doing their best to publicise the scheme. However, if they were doing so from the beginning, then the claims during the heavy rains of 2017 should have seen farmers making claims for crop losses in the affected districts of Patan, Morbi, Surendranagar, Jamnagar and Banaskantha. However, a majority of them were unable to do so primarily because they were unaware of the process of filing claims.
Post-2018 the companies can claim that their efforts are in fact enough – since most people know about the scheme. However, the scheme by 2018 was already well known due to the media reporting on the difficulties of farmers in getting their claims processed, not knowing how to get them processed etc.
The farmers have mostly said that they did not know and have not seen advertisements giving out crucial details. While the insurance companies, on their websites, have put out some details, but the claims do not square up with the farmers’ awareness levels. For instance, the website of Reliance General Insurance provides some details of the kind of awareness-creation mechanisms deployed for the purpose. But it does not appear to be adequate for the purpose.
They have 11 districts to serve, and four hoardings per district are certainly not enough. Or again, two newspaper ads “in leading newspapers of the state” is a vague claim (in districts the particular district papers are more widely read than the state-wide newspaper) and certainly not enough as publicity. The social media that they employ are LinkedIn and Twitter. Clearly the people (at least the majority of them) who would be availing the benefits of PMFBY would not be on these two platforms.
It is no surprise that reports of windfall profits by insurance companies started to make the rounds since the first year. These have been refuted by the government, the banks, the insurance companies, Insurance Regulatory and Development Authority of India (IRDAI) etc.
“What is intriguing is that Kharif 2016 saw a good monsoon while the subsequent years, particularly Kharif 2018 were bad monsoon years, i.e. the claim settlement in the good monsoon year outstrips the claim settlement in the relatively worse years”, the study, titled “Flop Scheme: An analysis of the PMFBY in Gujarat”, authored by Persis Ginwalla, and published by the Centre for Financial Accountability, a Delhi-based advocacy group, says, alleging, companies, including MNCs, have been indifferent towards farmers.
Excerpts:
Farmers from different districts have said that despite losses, despite being declared drought or flood affected, the claim pay-outs have been meagre (even laughable if it were not tragic) or not at all. There is one example of a farmer, VKA, from Modasa taluka of Arvalli district. He had availed of a loan of Rs 48,183 for his agricultural field measuring 1.3509 ha (divided between 3 brothers) for the groundnut crop.Now, unseasonal rains in Gujarat in 2019 and then the cyclonic disturbances of ‘Kyarr’ and ‘Maha’ wreaked havoc on the groundnut crop, so much so that the state government declared a relief package for nearly all the farmers in the state. VKA lost his groundnut crop. At the end of the season, when the damages were calculated, he received a sum of Rs 100 as damages for the crop loss suffered. He is, however, entitled to the entire sum due to him for the crop loss.
The Government of Gujarat (GoG) had then declared an assistance of Rs. 5,800 (upto 2 ha) if the crop loss was more than 33% in the taluka, and in talukas where it was below 33% it gave Rs. 4,000 and the compensation was paid accordingly. That the loss happened is therefore proven and endorsed by the government action. PP, secretary of the cooperative society, did inquire about the sum of the claim settlement but “the Reliance General Insurance Company did not give me an answer when I contacted them. Arvalli district was declared as 33% flood-affected by the GoG so why does the company not accept it?”
The companies may claim that they are/were doing their best to publicise the scheme. However, if they were doing so from the beginning, then the claims during the heavy rains of 2017 should have seen farmers making claims for crop losses in the affected districts of Patan, Morbi, Surendranagar, Jamnagar and Banaskantha. However, a majority of them were unable to do so primarily because they were unaware of the process of filing claims.
Post-2018 the companies can claim that their efforts are in fact enough – since most people know about the scheme. However, the scheme by 2018 was already well known due to the media reporting on the difficulties of farmers in getting their claims processed, not knowing how to get them processed etc.
The farmers have mostly said that they did not know and have not seen advertisements giving out crucial details. While the insurance companies, on their websites, have put out some details, but the claims do not square up with the farmers’ awareness levels. For instance, the website of Reliance General Insurance provides some details of the kind of awareness-creation mechanisms deployed for the purpose. But it does not appear to be adequate for the purpose.
They have 11 districts to serve, and four hoardings per district are certainly not enough. Or again, two newspaper ads “in leading newspapers of the state” is a vague claim (in districts the particular district papers are more widely read than the state-wide newspaper) and certainly not enough as publicity. The social media that they employ are LinkedIn and Twitter. Clearly the people (at least the majority of them) who would be availing the benefits of PMFBY would not be on these two platforms.
It is no surprise that reports of windfall profits by insurance companies started to make the rounds since the first year. These have been refuted by the government, the banks, the insurance companies, Insurance Regulatory and Development Authority of India (IRDAI) etc.
Their contention is that the insurance companies also have to bear the cost of reinsurance as well as claim pay-outs etc. and over some years the profit margins would flatten out. The point that the various agencies and individuals make is that premiums and subsidies together with low claim-payouts contribute to the profits. While this may be true, the other part of the story is equally important.
It has been found that the companies have not set up the mandated infrastructure in terms of offices (state, district and taluka), qualified staff, phones and helplines, and the much needed awareness drives through multiple media. Almost all people that we have spoken to attested to lack of offices, or phone calls not being answered or queries being stalled or ignorance about training programmes, or billboards or pamphlets.
Per the data on offices of insurance providers in Gujarat gleaned from the Handbook on Indian Insurance Statistics 2017-18, all but two providers (New India Assurance [NIA] and United India Insurance [UII]) of the 10 (Agriculture Insurance Company of India [AIC], HDFC-Ergo, IFFCO-Tokio, Reliance General, Universal Sompo, Bharti AXA and Bajaj-Allianz) have inadequate office infrastructure.
It has been found that the companies have not set up the mandated infrastructure in terms of offices (state, district and taluka), qualified staff, phones and helplines, and the much needed awareness drives through multiple media. Almost all people that we have spoken to attested to lack of offices, or phone calls not being answered or queries being stalled or ignorance about training programmes, or billboards or pamphlets.
Per the data on offices of insurance providers in Gujarat gleaned from the Handbook on Indian Insurance Statistics 2017-18, all but two providers (New India Assurance [NIA] and United India Insurance [UII]) of the 10 (Agriculture Insurance Company of India [AIC], HDFC-Ergo, IFFCO-Tokio, Reliance General, Universal Sompo, Bharti AXA and Bajaj-Allianz) have inadequate office infrastructure.
Insurance companies' toll-free numbers are of Gurgaon and elsewhere (outside Gujarat). Most of the times the calls remained unanswered; when they were answered, the replies were in Hindi
More importantly, there has been a minimal or insignificant increase in the number of offices in the years since the introduction of PMFBY i.e. 2016 over the earlier year. This means that new offices were not set up.
For instance, IFFCO-Tokio was the sole insurance provider in 33 districts for the Rabi 2017-18 season; however, it has a total of only 14 offices in Gujarat in 2018! Per its website however it has 23 offices in 19 districts, which means that 14 districts did not have offices. Universal Sompo has a total of five offices, whereas it has been allotted 11 districts.
For instance, IFFCO-Tokio was the sole insurance provider in 33 districts for the Rabi 2017-18 season; however, it has a total of only 14 offices in Gujarat in 2018! Per its website however it has 23 offices in 19 districts, which means that 14 districts did not have offices. Universal Sompo has a total of five offices, whereas it has been allotted 11 districts.
HDFC-Ergo General Insurance Co too has a total of 10 but its website says it has eight only. They provided PMFBY to 22 districts in Kharif 2016 but had only 9 offices then. Reliance General seems to have an adequate number of offices, 14, according to the number of districts that they are servicing, which is 11. Per the website, it has 20 offices. However, only three of the 11 districts in the two clusters that they service have offices viz. Rajkot, Surat and Bhavnagar; the rest of the eight districts (Tapi, Navsari, Dang, Valsad, Devbhumi Dwarka, Porbandar, Arvalli and Kheda) have no offices.
Similarly for Bharti AXA, which has 6 and 7 offices in 2017 and 2018 respectively for six districts. But on checking on the website of Bharti-AXA it appears that they have in fact 14 offices. But three of those are situated in one city, Vadodara, which is one of the six districts it is serving. The rest of the 5 districts (Jamnagar, Mahisagar, Dahod, Gir Somnath and Chhota Udepur) in the cluster allotted to them have no office!
Bajaj-Allianz is shown as having 22 offices, but the website showed 18. Of these, only four are in the districts allotted to it, the rest of the 7 districts have no offices. AIC has only one office in Gujarat and on checking for it on the website it showed up only one office in Ahmedabad and was corroborated by their office when contacted on the helpline number. This is a concern since it has been selected the most number of times.
This is also a grievance that farmers voice with regard to the insurance providers, viz. they have a minimal or no presence in the district and no one knows them. If they are not present in the district headquarters, how are the farmers to inform the insurance company, for instance, about change of crop plan which they are supposed to do within a week of sowing? Clearly it would be impossible for an individual farmer to take time out during the busy sowing season for this task (which may entail going to Ahmedabad or elsewhere).
The helpline number, as per reports from farmers, has been announced in each district. The experience, however, has not been a positive one. The experience of the farmers with helplines has been very negative. Says Sagar Rabari, President, Khedut Ekta Manch (KEM), Gujarat, says:
Similarly for Bharti AXA, which has 6 and 7 offices in 2017 and 2018 respectively for six districts. But on checking on the website of Bharti-AXA it appears that they have in fact 14 offices. But three of those are situated in one city, Vadodara, which is one of the six districts it is serving. The rest of the 5 districts (Jamnagar, Mahisagar, Dahod, Gir Somnath and Chhota Udepur) in the cluster allotted to them have no office!
Bajaj-Allianz is shown as having 22 offices, but the website showed 18. Of these, only four are in the districts allotted to it, the rest of the 7 districts have no offices. AIC has only one office in Gujarat and on checking for it on the website it showed up only one office in Ahmedabad and was corroborated by their office when contacted on the helpline number. This is a concern since it has been selected the most number of times.
This is also a grievance that farmers voice with regard to the insurance providers, viz. they have a minimal or no presence in the district and no one knows them. If they are not present in the district headquarters, how are the farmers to inform the insurance company, for instance, about change of crop plan which they are supposed to do within a week of sowing? Clearly it would be impossible for an individual farmer to take time out during the busy sowing season for this task (which may entail going to Ahmedabad or elsewhere).
The helpline number, as per reports from farmers, has been announced in each district. The experience, however, has not been a positive one. The experience of the farmers with helplines has been very negative. Says Sagar Rabari, President, Khedut Ekta Manch (KEM), Gujarat, says:
“The toll-free numbers are of Gurgaon and elsewhere (outside Gujarat). Most of the times the calls remained unanswered; when they were answered however, the replies were in Hindi and the farmers being unfamiliar with it, found it difficult to understand what was being told to them, Further, the insurance companies asked the farmers to inform them of crop-damage within 72 hours of occurrence of crop-loss/damage; however, when the farmers tried to do so the calls would not go through.”
One of our respondents told us that they were unaware of the 72-hour deadline for reporting crop-loss. “When they told us of the insurance policy, why did they not inform us of this rule as well?”
And then the issue of filling insurance forms online. Said PP, secretary of a cooperative society:
“The crop-loss form is in English. How will an ordinary farmer fill it? Some of us youths who are educated then volunteered and helped them in filling the forms and directed them as to the next steps... Even the insurance policy is to be filled online. Naturally most farmers are unable to do it. So they go to the panchayats which have computers and internet connection and someone over there fills it for them upon a payment of Rs. 50 or 100 and then gives them a print-out which they will bring to the cooperative society and we prepare an Excel sheet of all the farmers and give it to the Bank and the Bank then passes it on to the Insurance Company.”
It is the farmers, the cooperative society and the volunteers in the community that are doing the work that the insurance company ought to be doing.
It is these savings on costs (human resources to fill the forms, receipts and copies of policy document, awareness drives, offices, phones and helplines) that companies resort to which constitutes unearned and unmerited profits. This adds to the general complaint of pay outs being far less than claims and in no way commensurate to losses suffered.
Profit, in itself, is not an issue but deliberately denying services and product delivery to the beneficiaries, resulting in them having to run from pillar to post, reducing them to supplicants should constitute a major failure of the scheme.
One of our respondents told us that they were unaware of the 72-hour deadline for reporting crop-loss. “When they told us of the insurance policy, why did they not inform us of this rule as well?”
And then the issue of filling insurance forms online. Said PP, secretary of a cooperative society:
“The crop-loss form is in English. How will an ordinary farmer fill it? Some of us youths who are educated then volunteered and helped them in filling the forms and directed them as to the next steps... Even the insurance policy is to be filled online. Naturally most farmers are unable to do it. So they go to the panchayats which have computers and internet connection and someone over there fills it for them upon a payment of Rs. 50 or 100 and then gives them a print-out which they will bring to the cooperative society and we prepare an Excel sheet of all the farmers and give it to the Bank and the Bank then passes it on to the Insurance Company.”
It is the farmers, the cooperative society and the volunteers in the community that are doing the work that the insurance company ought to be doing.
It is these savings on costs (human resources to fill the forms, receipts and copies of policy document, awareness drives, offices, phones and helplines) that companies resort to which constitutes unearned and unmerited profits. This adds to the general complaint of pay outs being far less than claims and in no way commensurate to losses suffered.
Profit, in itself, is not an issue but deliberately denying services and product delivery to the beneficiaries, resulting in them having to run from pillar to post, reducing them to supplicants should constitute a major failure of the scheme.
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