Recent statistics released by the General Insurance Council of India reveal the extent of insurance premium growth in the country, and particularly in the agriculture sector.
Agricultural insurance premiums increased by 75 percent between April and October this year, compared to the same period last year, following the launch of the Pradhan Mantri Fasal Bima Yojana (PMFBY) crop insurance scheme earlier in 2016 during the Kharif season.
Premiums collected for agriculture business rose to Rs 18,000 crore over the same period last year. This equates to just under USD $3 billion, making it the third largest agricultural insurance scheme in the world after the U.S. (approximately $9.75 billion in 2015) and China (approximately $5.8 billion, of which 70 percent relates to crops). Agriculture insurance premiums for India are now ahead of Japan, with premiums at approximately $1 billion.
The agriculture ministry has also just announced that 26.5% of farmers are now insured, an increase of 18.5% from the previous year. The agricultural area insured has increased by 15 percent. This compares to 23 percent of the agricultural area across the country being insured in 2014. The goal is to increase coverage to over 50 percent of agricultural land.
Perhaps even more importantly – at least for the farmers who buy insurance – is that the total sum insured has increased by 104 percent. In the previous insurance scheme, the sum insured coverage was capped in order to minimize premiums. Therefore farmers who were insured could only recover a fraction of their losses. The new scheme provides premium subsidies so that the sum insured can increase and farmers can recoup all their losses when an event occurs.