Vagaries of weather

- Rainfall
- Temperature
- Humidity
- wind
- Cyclone
- hailstrom
Pests & Diseases
Fire
Quality of inputs
Soil
Market prices
 To provide insurance coverage and financial support
to the farmers in the event of prevented sowing &
failure of any of the notified crop as a result of
natural calamities, pests & diseases.

To encourage the farmers to adopt progressive

farming practices, high value in-puts and higher
technology in Agriculture.

To help stabilize farm incomes, particularly in

disaster years.
 LIC introduced first scheme based on individual approach in 1972
for cotton in Gujarat,
Continued up to 1978-79 and covered 3110 farmers
premium of Rs. 4.54 lakhs and paid claims of Rs. 37.88 lakhs.
In 1979 Pilot Crop Insurance Scheme (PCIS) was introduced.
homogenous area approach limited to loanee farmers.
13 States implemented till 1984-85,covering 6.27 lakh farmers
Premium of Rs. 196.95 lakhs and claims of Rs. 157.05 lakhs.
From Kharif 1985, Comprehensive Crop Insurance Scheme (CCIS)
was introduced which continued till Kharif 1999.
The claims ratio was 1 : 5.72.
CCIS was criticized for limited coverage of farmers, crops and risks.
For covering farmers, yield and price, Farm Income Insurance
Scheme (FIIS) was also Piloted during Rabi 2003-04 and Kharif
2004 seasons in selected districts
 NAIS:
National Agricultural Insurance Scheme
WBCIS:
Pilot Weather Based Crop Insurance
Scheme
CPIS:
Comprehensive Crop Insurance scheme
MNAIS:
Modified National Agricultural Insurance
Scheme
 For improving the scope and content of
CCIS( Comprehensive Crop Insurance scheme) a broad
based NAIS was introduced from Rabi 1999-2000.
NAIS provides for greater coverage of farmers, crops and risk
commitment.
It is presently being implemented by 25 States & 2 Union
Territories
In last 22 Crop Season:
Farmers Covered : 17.01 crore ( Av. not more than 15% farmers)
Premium Collected: Rs. 6213.41 crore
Claims Paid : Rs. 20437.21 crore
Claim ratio : 3.29
Loss cost : 9.86%
 Premium Rates
Sr. Season Crops Premium rates
No.
1. Kharif Bajra(Kambu) & Oilseeds 3.5% of SI or Actuarial rate,
(Autumn) whichever is less.

Other crops (cereals, other 2.5% of SI or Actuarial rate,

millets & whichever is less
Pulses)

2. Rabi Wheat 1.5% of SI or Actuarial rate,

(Spring) whichever is less

Other crops (other cereals, 2.0% of SI or Actuarial rate,

millets, whichever is less
Pulses & Oilseeds)

3. Kharif & Annual Commercial / Annual Actuarial rates

Rabi Horticultural crops
 States covered by NAIS:
All States and Union Territories

Farmers to be covered:
Compulsory to all loanee farmers and voluntary
to non-loanee farmers.

. Risks Covered & Exclusions:

1) Natural Fire and Lighting
2) Storm, Hailstorm, Cyclone, Typhoon, Hurricane,
Tornado etc.
3) Flood and Landslide
4) Draught
5) Pests/Diseases, etc.
6)Losses arising out of war & nuclear risks, malicious
damage & other preventable risks shall be excluded.
Crops covered:
a) Food crops (Cereals, Millets & Pulses)
b) Oilseeds
c)Sugarcane, Cotton & Potato (Annual
Commercial / Annual Horticultural crops).

Limit Of Coverage:
In case of Loanee farmers the Sum Insured would
be at least equal to the amount of crop loan advanced.
o WBCIS(Pilot Weather Based Crop Insurance Scheme) is intended to
provide insurance protection to the farmers against adverse weather
incidence, such as deficit and excess rainfall, high or low temperature,
humidity etc.

o It has the advantage to settle the claims within shortest possible

time. The WBCIS is based on actuarial rates of premium but to make the
scheme attractive, premium actually charged from farmers have been
restricted to at par with NAIS.

o The scheme has been implemented in Kharif 2007 (1 State), Rabi

2007- 2008 (4 States), Kharif 2008 (10 States), Rabi 2008-09 (10 States),
Kharif 2009 (13 States) and Rabi 2009-10 (11 States). Administrative
approval for implementation of the Scheme in 20 States in Kharif 2010
season has already been issue on 3rd March, 2010.
The detailed structure of Premium Payable by the insured is tabled below.
Food Crops and Oilseeds
S.No. Crops Premium Payable by insured
1. Wheat 1.5% or Actuarial Rate, whichever is less.
2. Other crops (other 2.0% or Actuarial Rate, whichever is less.
cereals, millets, pulses &
oilseeds)

Annual Commercial/Horticultural Crops

S.No. Premium Slabs Subsidy
1. Upto 2% No Subsidy
2. >2-5% 25%, subject to minimum net Premium of
2.00% payable by farmer.

3. >5-8% 40%, subject to minimum net Premium of

3.75% payable by farmer.

4. >8% 50%, subject to minimum net Premium of

4.80% and maximum net premium of 6%
payable by farmer.
The major features of the scheme are :

Eligibility:
All farmers both loanee and non-loanee, are eligible. Insurance will
be compulsory to loanee and optional for non-loanee farmers.
Insurance Companies:
Agriculture Insurance Co. of India Ltd. (AIC) and ICICI-Lombard,
IFFCO-TOKIO General Insurance Co., Cholamandalam MS General
Insurance Co., HDFC- ERGO General Insurance Co.
Selection of area:
Areas, where WBCIS will be implemented, will be notified by the
State Governments concerned.

Crops covered:
Major cereals, millets, pulses & oilseeds, Commercial/ Horticultural
Crops .

Sum insured:
Maintaining maximum limit of sum insured broadly equivalent to
cost of cultivation, non-loanee farmers will have flexibility to insure smaller
amounts within maximum limit, but not less than 50% of maximum limit of
sum insured.
S.No. National Agricultural
Insurance Scheme
(NAIS)
1. Practically all risks covered
(drought, excess rainfall,
flood, hail, pest infestation,
etc.)
2. Easy-to-design if historical
yield data upto 10 years is
available
Weather Based Crop Ins
urance Scheme (WBCIS)
Parametric weather related
risks like rainfall, frost,
heat (temperature),
humidity etc. are covered.
However, these
parametric weather param
eters
appear to
account for majority of
crop losses
Technical challenges in
designing weatherindices
and also
correlating weather indices
with yield losses. Needs
upto 25 years
historical weather data
3. High basis risk [difference
between the yield of the Area
(Block / Tehsil) and the
individual farmers]
4. Delays in claims settlement
5. Quality losses are beyond
consideration
Basis risk with regard
to weather could be
high for rainfall and
moderate for others like
frost, heat, humidity etc.
Faster claims settlement
Quality losses to some extent
gets reflected
through weather index
 Modified National Agricultural Insurance Scheme
(MNAIS) is implemented in 50 selected districts of
India on pilot basis in place of National Agricultural
Insurance Scheme (NAIS) that means NAIS will be
withdrawn for both loanee and non loanee farmers
from those area/crops where MNAIS is implemented.
The main features of the scheme are given below :

Objective:
MNAIS aims at sustainable production in agriculture sector,
thereby ensuring food security, crop diversification and enhancing growth
and competitiveness from agriculture sector, besides protecting farmers
from production risks.
Loanee farmers are insured under compulsory category while non loanee
farmers are insured under voluntary category.
NAIS is withdrawn for those areas/crops of districts, in which MNAIS is
implemented.

Crops covered:
Food crops (Cereals, Millets & Pulses),Oilseeds,Annual
Commercial/Horticultural crops.

States and areas to be covered:

50 districts in different States

Farmers to be covered:
All farmers including sharecroppers, tenant farmers growing
the notified crops in the notified areas.
Risks covered & exclusions:

i) Standing crops: non-preventable risks like- Natural fire,

lightening, storm, cyclone, flood, landslide, drought, pest/diseases, etc.
ii) Prevented sowing/planting risk: In case farmer of an area is
prevented from sowing/planting due to deficit rainfall or adverse
seasonal conditions, such insured farmer who failed to sow/plant, shall
be eligible for indemnity
iii) Post harvest losses: coverage is available only for those
crops, which are allowed to dry in the field after harvesting against
specified perils of cyclone in coastal areas, resulting in damage to
harvested crop.
iv) Further, the coverage is available only upto a maximum
period of two weeks from harvesting.
Sum insured:

The sum insured would be at least equal to the amount of crop

loan sanctioned/advanced, which may extend upto the value of the
threshold yield of the insured crop at the option of insured farmer .
Premium rates & Subsidy:
Premium rates are to be worked out on actuarial basis. However,
the premium paid by the farmer is subsidized on following basis.
S.No Premium Subsidy to farmers
. slab

1. Upto 2% Nil

2. >2-5% 40% subject to minimum net premium of 2%

3. >5-10% 50% subject to minimum net premium of 3%

4. >10-15% 60% subject to minimum net premium of 5%

5. >15% 75% subject to minimum net premium of 6%

Presented by

Athik Ahmed.B
BTH-12-004