Frequently Asked Questions (FAQs)
1. What is PMFBY, highlight its main features?
The ongoing NAIS & MNAIS has been reviewed and modified with an objective to make it more farmer friendly. In addition to payment of claims for yield loss on area approach basis, its additional features include:
i. Unit area of insurance reduced to village/village panchayat level for major crops
ii. Threshold yield based on average yield of the best 5 years out of preceding 7 years
iii. Indemnity payment for Prevented sowing/planting risk
iv. Coverage of Post-harvest losses, up to 14 days of harvest, due to hailstorm, cyclone, cyclonic rains and unseasonal rains.
v. On-account payment upto 25% of likely claims as immediate relief
vi. Uniform seasonality disciplines both for loanee & non-loanee farmers
vii. Farmer's premium lowered for Food crops and oilseeds during Kharif to 2%, during Rabi to 1.5% and 5% for Annual Commercial/Horticultural crops during both seasons.
2. What would be the Sum insured under PMFBY?
The PMFBY envisages for uniform sum insured for both loanee and non loanee farmers. The sum insured under the scheme would be equal to scale of finance as decided by DLTC of the concerned district. Under the scheme loanee farmers, are to be covered compulsorily by the concerned bank if the crop for which loan is availed have been notified for coverage by the state government.
3. What are the benefits of compulsory coverage of loanee farmers?
In order to meet the objectives of the Scheme i.e. providing financial support to the farmers and help in stabilizing farm income, element of compulsory coverage of loanee farmers was incorporated under NAIS and MNAIS, which have been continued in PMFBY. This has been done so that the insured farmer gets the claim in the event of shortfall in the yield due to the insured perils/disasters, which would offset the crop loan to the extent of the claims, and he would be in a better position to obtain fresh crop loan for the next season after liquidating earlier crop loan.
In the event of the crop not insured, the loan remains outstanding in the books of Account of the Bank and farmer is deprived of any support which he would have otherwise got. It also encourages the financial institutions to increase the credit flow for crop production purposes to the farmers as the insurance acts as collateral for the banks. It also ensures the maximum coverage/participation under the scheme.
4. How is premium calculated under the scheme?
Before the start of crop season, the concerned state government would invite premium rate from the empanelled insurance companies through the process of competitive bidding. Participating insurance companies would work out actuarial premium for each notified crop through standard actuarial methodology in conformity with provisions of IRDA. The insurance company having quoted minimum weighted premium rate would be implementing the scheme in the district/group of districts.
5. What is the limit of Premium subsidy?
Premium subsidy is available to all the farmers who participate in the scheme if the actuarial premium rate of the crop is more than the capped rate of 1.5%, 2% or 5% as applicable fort the crop.
6. What is the limit of Sum Insured for availing Premium subsidy?
Premium subsidy is available to all the farmers up to the eligible sum insured depending on the acreage under the crop proposed for the insurance.
7. Can the State government opt / decide the Indemnity Level (IL)?
IL is assigned on the basis of risk profile/classification of the crop in the selected district (low, medium & high). The IL will be decided by the concerned state government for inviting premium rates, which would be applicable during the season.
8. How do the States classify Major and Minor crops?
The major and minor crops are categorized at national/State level. However, for the purpose of PMFBY, it's important to keep in mind that adequate cropped area is required at Insurance Unit (IU) level for conduct of Crop Cutting Experiments (CCEs). In view of this requirement, it may be ideal to consider acreage in terms of parameters like season, crop, district, sub-district to decide whether or not a particular crop qualifies as major crop. It's quite possible that a crop can be major in some district, and minor in other districts. It may be noted that for 'major crop', the IU has to be Village / village Panchayat.
9. Can the area re-sown/replanted after "prevented / failed sowing" be insured under PMFBY?
The re-sown / replanted crops / areas (after availing prevented / failed sowing benefit) shall be eligible for insurance, within the cutoff date if the 2nd crop sown is a notified crop and the same is re-sown within the original seasonality.
10. What should be the Insurance Unit (IU)?
PMFBY clearly envisages that the IU should be Village/Village Panchayat or any other equivalent unit for major crops, and for other crops it can be a unit between Village Panchayat to Taluka, to be decided by the State/UT Government.
11. Who will establish Weather stations?
The State Government is primarily responsible for providing all necessary inputs like yield data and weather data/information to insurance companies. Therefore, State Govt. shall establish and strengthen weather station network for enabling the provisions of on-account payment, sowing failure, etc.
12. Up to what period are the Post-Harvest cover available and which perils are covered?
The Post-harvest cover is available up to 14 days from harvest for crop lying in 'cut & spread', small bundled conditions only, arising out of hailstorm, cyclone, cyclonic rains and unseasonal rains. In other words, no insurance cover would be available on expiry of 14 days from the date of harvest. Claim intimation in respect of losses arising within 14 days from the harvest must be given within 72 hours of occurrence of above perils.
13. Can PMFBY and WBCIS be notified in same district?
Once a district is notified under PMFBY, preferably all the insurable crops for yield is generated through CCEs should be notified under PMFBY. However, States have the option to notify a particular crop or a particular tehsil / block under WBCIS. Same crop within a notified insurance unit cannot be notified under both FMFBY and WBCIS.
14. What all factors are taken into account for taking decision on releasing notification in a particular area?
The major factors that form the basis of the decision for releasing a notification are - availability of past yield data based on CCEs for adequate number of years, cropped acreage, and ability to conduct requisite number of CCEs for estimating yield during proposed season, etc.
15. How the claims are assessed for widespread calamities?
In case of widespread calamities leading to damage and loss of notified crops, claims are settled on area approach basis. The State Government have to conduct requite number of Crop Cutting Experiments (CCEs) i.e. at least 4 CCEs per village/ village panchayat for major crops and 8 CCEs for minor crops, for estimation of actual yield and submit the yield data for each notified crop(s)/area(s) to insurance company for calculation of admissible claims.
Any insured crop in a notified area recording lower actual yield than the guaranteed yield shall automatically become eligible for compensation/ claim. The shortfall in yield is determined for each crop and is the difference between the guaranteed yield and the current season's actual yield. Shortfall % is determined by expressing the shortfall as a proportion of guaranteed Yield.
Claim is then computed by multiplying the sum insured with the shortfall percentage. Therefore, no claims would be admissible/payable in case the current season's actual yield is more than the threshold yield. Applicable amounts of claims so arrived at are credited to the farmers' accounts through the banks in case of those farmers who are covered through the banks and by way of RTGS in case of non-loanee farmers covered through insurance intermediaries.
16. Is 'On account' payment to be implemented in all States?
Insurance companies in consultation with concerned State/UT Govt. based on agro meteorological data / satellite imagery / acreage damaged or any other proxy indicator will decide about crops / areas eligible for 'on account' payment. Services of expert agency may also be used for estimating / quantifying the benefits under 'on-account' payment. It will be implemented only in States where such proxy indicators can be established.
17. When is 'On account' payment to be considered?
'On account' payment shall be considered at the Insurance Unit level if the estimated crop losses are more than 50% (as compared to average normal yield).
18. How the assessment for on-account payment of claims due to Mid-Season Adversity will be done?
In case of adverse seasonal conditions during crop season viz. floods, prolonged dry spells, severe drought etc., insurance companies in consultation with concerned State Government/UT based on agro meteorological data/ satellite imagery or any other proxy indicator will decide the admissibility and amount of on-account payment of claims for the notified crops/areas. Appraisal of mid-season adversity and quantum of on-account payment will be established jointly by Government of India/concerned State Government/UT and insurance company(ies).
19. What is the Maximum amount payable under 'on-account' payment?
The maximum amount payable would not exceed 25% of the likely claims. The on-account payment shall be subject to adjustment against claims assessed on yield basis i.e. only difference of claims would be paid if final yield-based claims is more than the on-account payment already made.
20. When the claims are payable/assessed for prevented sowing/planting?
This clause is applicable only to the major crops of the insurance unit. It may be invoked if, due to non-receipt of enough rainfall or excess rainfall or other weather adversities, farmers in a insurance unit is not in a position to either sow or transplant crop or grow crop (failed at an early stage). When this incidence is widespread i.e. more than 75% of area in one insurance unit remains unsown / failed sowing, then state government in consultation with insurance company, based on weather / rainfall position, area sown, crop condition report/other data data/information provided by IMD/State Govt. for the insurance unit, will decide on claims to be paid under this cover. Once a claim under this provision is paid the insurance cover would terminate.
21. What is the scale of payment for prevented sowing?
The rainfall requirement for sowing and the quantum of inputs used before sowing vary from crop to crop. To make it simple 25% of sum insured would be paid under the cover.
22. When the claims are payable/assessed for localized calamities?
Insured farmers who experience crop losses due to occurrence of localised perils i.e. cloudburst, natural fire due to lightening, hailstorm, landslide and inundation will give immediate notice to insurance company through concerned financial institution /channel partner, state govt. officials or directly, within 72 hours along with particulars of crop insured and extent and cause of damage. On receipt of loss intimation, insurance company shall depute Loss assessors (authorised loss assessors or technical personnel of the company) to area for assessment of crop loss. District Revenue administration and Agriculture Department shall assist insurance company in assessing extent of crop loss.
23. What is the scale of payment for localized perils/calamities?
Cost of inputs incurred until time of occurrence of peril, and expected loss in final yield due to peril, will form basis for loss assessment. In case claims settled under localised claims are less than 'area approach' claims, only balance claims shall be paid to insured. However, if claims settled under localized calamities are higher than widespread calamity-based claims, farmer is not required to refund the claim.
24. How the claims are assessed for Post-Harvest losses on individual basis?
In case of occurrence of specified peril of hailstorm, cyclone, cyclonic rains or unseasonal rains resulting in damage to harvested crop lying in field up to 14 days of harvest in 'cut & spread' or small bundle condition, insured farmer has to lodge an intimation to the insurance company through Nodal Bank/Intermediary, state govt. officials or directly within 72 hours of occurrence of event. This coverage is available only up to maximum period of two weeks (14 days) from harvesting. Harvested crop bundled and heaped at a place before threshing is beyond coverage under post-harvest losses.
Assessment of damage will be on individual plot basis. Insurance company will nominate an authorized loss assessor who will visit the field and assess damage and submit report to insurance company. Services of local officials of Bank and Agriculture / Revenue authorities may be utilized for this purpose by insurance company.
Based on report submitted by loss assessor, insurance company will arrive at claim payable and loss as a percentage of sum insured. Claim payable will be higher of area approach-based claim and claim assessed for post-harvest losses.
25. How can a non loanee farmer avail insurance under PMFBY?
A non loanee farmer can participate in the scheme if the proposed crop is notified for insurance by the state government. The farmer can either approach the nearest bank branch, an insurance intermediary of any authorized insurance company or directly to the insurance company. The farmer needs to fill a simple proposal form and enclose proof of crop sown and land and submit with requisite premium. For participating in the scheme, the non loanee farmer must have a saving bank account in any bank branch of the area.
26. Who will bear the claims under PMFBY?
The claims are to be fully borne by the implementing insurance company. However, the Government shall act as reinsurer of last resort in case loss ratio exceeds 350%.
27. How is the premium subsidy shared?
Premium subsidy would be shared by Centre & State Government on 50:50 basis.
28. What are the provisions to settle the disputed claims/additional claims arisen due to any problems/mistake/errors/omission under PMFBY?
The settlement of all claims of the insured farmers is the responsibilities of the concerned Insurance companies. However, disputed claims / sub-standard claims, if any will be referred through SLCCCI to GOI and decision of GOI in case of any interpretation of provisions of scheme or disputes will be binding on State Govt. / Insurance Company / Banks and the farmers.