Indian insurers profited nearly $5b in government crop insurance scheme

The scheme was launched in 2016.

Over the last five years, insurance firms in India made $4.99b under the central government’s crop insurance scheme, the Pradhan Mantri Fasal Bima Yojana (PMFBY) said.

This data was revealed by agricultural minister Narendra Singh Tomar in a written response to questions to the Parliament. The minister said that insurers paid claims of $15b against a premiums income of $20b.

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Under the PMFBY, eighteen general insurance companies were enlisted by the Indian government to distribute its crop insurance scheme in the country. The state goverments then selected specific insurance companies through a transparent bidding process to implement the PMFBY in their respective states.

The PMFBY lets kharif farmers or summer crop farmers pay only a premium of 2% of the sum insured whilst it lets rabi crop farmers (winter crops) pay 1.5% in premiums. For annual commercial and horticultural crops, the maximum premium to be paid by farmers is only 5%. The remaining premium amount is borne equally by the central and state governments.