The legal provisions related to insurance for agricultural risks in India primarily aim to provide financial protection to farmers against various uncertainties affecting agriculture. Here are the key provisions and schemes associated with agricultural risk insurance: Pradhan Mantri Fasal Bima Yojana (PMFBY): Launched in 2016, PMFBY is a flagship crop insurance scheme aimed at providing financial support to farmers in the event of crop failure due to natural calamities, pests, or diseases. The scheme covers food crops, oilseeds, and annual commercial/horticultural crops. Premiums are subsidized, and farmers pay a nominal premium (2% for kharif crops, 1.5% for rabi crops, and 5% for commercial and horticultural crops). The scheme offers coverage for both yield loss and localized risks. Weather-Based Crop Insurance Scheme (WBCIS): This scheme provides insurance coverage based on weather parameters (e.g., rainfall, temperature) rather than crop yield. Farmers can insure their crops against specific weather-related risks, such as droughts or excess rainfall. The premium is determined based on the risks associated with specific weather events in the region. National Agricultural Insurance Scheme (NAIS): NAIS was replaced by PMFBY but was previously one of the primary crop insurance schemes in India. It provided coverage against yield losses due to natural calamities and was aimed at promoting agricultural productivity. Insurance Act, 1938: The Insurance Act regulates the insurance industry in India, including agricultural insurance. It lays down the framework for the licensing of insurance companies, policyholder rights, and the protection of consumers in insurance transactions. Agricultural Insurance Company of India Limited (AIC): AIC is the sole public sector insurer specifically focusing on agricultural insurance. It implements various government-sponsored schemes, including PMFBY and WBCIS, and offers insurance products tailored to farmers’ needs. Eligibility and Coverage: Farmers are eligible to enroll in crop insurance schemes if they cultivate the insured crops and adhere to the guidelines set by the respective schemes. Coverage typically includes protection against loss of crop yield due to natural disasters, pest attacks, and certain other specified risks. Claims Process: In the event of crop loss, farmers must notify the insurance provider and submit a claim along with necessary documentation (e.g., proof of loss, photographs, etc.). The insurer conducts an assessment to determine the extent of loss before disbursing the claim amount. Subsidies and Support: The government provides financial assistance and subsidies to farmers for premiums under various insurance schemes to make them more affordable. State governments may also have their own agricultural insurance programs that complement central schemes. Awareness and Training: Government agencies and insurers conduct awareness campaigns and training programs to educate farmers about the importance of agricultural insurance and the available options. In summary, the legal provisions related to insurance for agricultural risks in India primarily encompass government-sponsored schemes like PMFBY and WBCIS, regulated under the Insurance Act, and implemented by the Agricultural Insurance Company of India. These provisions aim to provide financial protection to farmers against various agricultural risks, thereby promoting stability in the agricultural sector.

Dear client, CROP INSURANCE Crop or Agriculture Insurance covers risks of anticipated loss in yield of various crops. Almost the entire of Crop Insurance business comes from ‘Schemes’ or ‘Programme’. These Schemes operate on principles of ‘Area Approach’. Coverage is compulsory for farmers taking crop loans from rural financial institutions (RFIs) for cultivation of crops, i.e., loanee farmers. Non-loanee farmers can also insure their crops under the same schemes. The main Schemes available to farmers in respect of crop insurance are as under- a) National Agricultural Insurance Scheme (NAIS) of Government of India b) National Crop Insurance Programme (NCIP) of Government of India i. Modified National Agricultural Insurance Scheme (MNAIS), ii. Weather Based Crop Insurance Scheme (WBCIS) and iii. Coconut Palm Insurance Scheme (CPIS) a. National Agricultural Insurance Scheme (NAIS)- NAIS was introduced in the year 1999 and is presently in operation in a few states. The Scheme is practically an all-risk insurance cover based on ‘Area Yield Index’. 1. Which are the crops covered- The Scheme covers all food, oilseeds and annual commercial / horticultural crops for which historical yield data is available and crop cutting experiments are planned for the current year. State governments issue notifications containing names of crops, areas eligible for insurance, rates of premium etc. at the beginning of each cropping season. 2. Who can insure- The Scheme is available to all Farmers - compulsory for borrowing farmers and optional for non-borrowing farmers. Farmers have to fill-up a simple Proposal Form and submit the same with premium amount at the nearest branch of bank or Primary Agricultural Credit Society. 3. What is the Sun insured and Premium- Sum Insured is at least equal to loan amount which can be increased to 150% of the value of average yield at the option of the farmer. There are limits for nonloanee farmers which are published in state government’s notification. Premium rates for Food crops and Oilseeds ranges from 1.5% to 3.5% and actuarial rates are charged for Annual Commercial / Horticultural Crops. Subsidy in premium is available to small and marginal farmers at 10% of premium. Some State governments offer higher subsidy. 4. Where to pay premium(Intermediary)-Network of financial institutions viz. commercial banks, regional rural banks and cooperative banks, spread across length and breadth of country, play the role of intermediaries. The scheme operates broadly on bancassurance model. 5. Levels of indemnity- Levels of indemnity are 60%, 80% and 90% which means farmers are themselves to bear the loss of first 40%, 20% or 10% respectively. This condition is also broadly called ‘deductible’. 6. What is the procedure for claims- The Scheme operates on principles of Area-Yield Index or Guarantee. There is a guaranteed yield termed as Threshold Yield for every crop in every Homogenous Area e.g. taluka, block or gram panchayat etc. Threshold Yield is moving average of past five years actual yield (three years in case of Paddy andWheat) multiplied by applicable level of indemnity. If current season’s actual yield recorded is lower than the Threshold yield, then claims become payable. Yield data used for claims is generated under General Crop Estimation Surveys (GCES) by way of crop cutting experiments. Procedure of assessment and settlement of claims are automated processes and the claim amount is credited to insured farmers’ bank account. No paper work is required to be done by insured farmers or intermediaries. b. National Crop Insurance Program (NCIP)- NCIP has three components- viz. MNAIS, WBCIS and CPIS. There are some common features for MNAIS andWBCIS components i.e. 1. Private sector insurance companies are allowed as ‘implementing agencies’. 2. Rates of premium are charged on actuarial basis. Actuarial rates of premium help insurance companies to transfer the risk in global reinsurance market and the governments to budget their liabilities. 3. Premium payable by farmers is subsidized substantially to make it affordable. 4. Sum insured is broadly equal to cost of cultivation. 5. All claims will be paid by insurance company as there will be no sharing of claims by state and central governments. a. Component- I: Modified National Agricultural Insurance Scheme (MNAIS) MNAIS is an improved version of NAIS. 1. Which are the crops covered- The Scheme covers all food, oilseeds and annual commercial / horticultural crops for which historical yield data is available and crop cutting experiments are planned for current year. State governments issue notifications containing names of crops and areas eligible for insurance, rates of premium etc. at the beginning of each cropping season. 2. Who can insure- Available to all Farmers - compulsory for borrowing and optional for nonborrowing farmers- who have to fill-up a simple Proposal Form and submit the same with premium amount in a nearest branch of bank or Primary Agricultural Credit Society. 3. What is Sum insured and premium- Sum Insured is based on cost of cultivation and at least equal to loans disbursed. Often the State government decides the sum insured for various crops for a district within the State. Sum insured can extend up to value of Threshold Yield. Premium rates vary from crop to crop and area to area based on risk profile reflected in historical yield data, past insurance and claims experience. 4. Where to pay premium (Intermediary)- Network of financial institutions viz., commercial banks, regional rural banks and cooperative banks, spread across length and breadth of country plays the role of intermediaries. Additionally, insurance intermediaries licensed by IRDAI are also allowed to insure non-loanee farmers. 5. Levels of Indemnity- Levels of indemnity are 80% and 90% which means farmers have to bear first 20% or 10% of losses respectively. 6. New provisions on claims- MNAIS provides for additional features in terms of coverage of 'Prevented sowing', post harvest losses, individual farm level assessment in case of localised calamities, and on- account settlement of claims in case of serious crop losses/ major disasters. Component – II: Weather Based Crop Insurance Scheme (WBCIS)- The Scheme covers all food, oilseeds and annual commercial / horticultural crops. All crops for which historical yield data is not available can also be covered. 1. Who can insure- Available to all Farmers - compulsory for borrowing farmers and optional for non-borrowing farmers -who have to fill-up a simple Proposal Form and submit the same with premium amount in a nearest branch of bank or Primary Agricultural Credit Society. 2. Risks covered- Major perils covered are deficit, excess and deviation of rainfall, relative humidity, temperature (high and low), wind speed and combination of above. Risks of hail-storm and cloud burst can also be covered as add-on covers. 3. What is Sum Insured and Premium- Sum Insured is pre-defined and is based on cost of cultivation, and is decided by the state for each crop and district. Premium rates can be a maximum of 10% for Kharif and 8% for Rabi season with 12% for commercial / horticultural crops. The premium subsidy available ranges from 25% to 50%. 4. Where to pay premium(Intermediary)- Network of financial institutions viz., commercial banks, regional rural banks and cooperative banks, spread across length and breadth of country plays the role of intermediaries. Insurance intermediaries licensed by IRDAI are also allowed to insure non-loanee farmers. 5. What is the procedure for claims- If observed weather index value falls below or above (as the case may be) the notified trigger value, then claims shall be calculated per unit area. Claims are assessed and settled solely based on weather data of automated stations installed in Reference Unit Area for the purpose. Calculation is done based on term sheets published in notifications.Procedure of assessment and settlement of claims are automated processes. No paper work is required to be done by insured farmers or intermediaries. Losses for Add-on covers are assessed on individual basis for which farmers have to intimate the insurance company within 48 hours of the occurrence of the insured peril. 3. Component- III: Coconut Palm Insurance Scheme (CPIS) This scheme operates largely like a non-life insurance policy. It is an annual contract, administered only by Agriculture Insurance Company of India. a. Who can insure- Any palm grower having at least five healthy nut bearing palms in a contiguous area is eligible to insure. Palms are insured in two categories viz., palms in age group of 4 to 60 years in case of dwarf and hybrid palms and 7 to 60 years in case of tall variety. b. What is covered- Storm, Hailstorm, cyclone, typhoon, tornado, heavy rains, flood, inundation, pests, diseases, accidental fire, forest fire, bush fire, lightening, tsunami, severe drought and consequential total loss causing death of palm or making it totally un-productive. c. What is not covered- Loss due to theft, war, nuclear risks, rebellion, revolution, insurrection, mutiny, natural mortality, uprooting etc. d. Sum Insured and Premium- Sum Insured for palms within the age group of 4th to 15th year is Rs. 900/- and premium is Rs. 9.00 per tree while for palms within the age group of 16th to 60th year is Rs. 1750/- and premium is Rs. 14.00 per tree. Subsidy of 75% is available. Farmer pays only 25% of premium amount. e. Assessment of claims- Claims have to intimated to the insurance company within 15 days from occurrence of peril. Claims will be assessed on individual basis and claims amount will be released to insured farmer. Should you have any queries, please feel free to contact us!