Reliance General Insurance Company Limited has been entrusted to implement the scheme in 10 districts of Maharashtra, which is one of the states which has seen good enrollment and payout to farmers since start of the scheme.
Maharashtra’s Agriculture Commissioner Dheeraj Kumar has pulled up Reliance General Insurance Company Limited for not starting payouts of claims for kharif season this year under the Pradhan Mantri Fasal Bima Yojana (PMFBY) in the state. Kumar has accused the company of not paying out the claims raised by state farmers, which, according to him, can lead to serious law and order problems in the districts where the company is responsible for implementing the scheme.
The insurance firm has, however, said its failure to settle claims “is due to the failure of the state government to release the subsidy on time.”
PMFBY, a scheme with relatively certain payouts and comparatively lower rate of premium, is favoured by lakhs of farmers in the state. The scheme entails companies paying compensation to farmers in return of premium received from both the central and state governments, as well as farmers themselves. According to revised guidelines of the scheme, a particular insurance company now has the task of implementing it in certain districts.
Reliance General Insurance Company Limited has been entrusted to implement the scheme in 10 districts of Maharashtra, which is one of the states which has seen good enrollment and payout to farmers since start of the scheme. The viability of the scheme for insurance companies, however, has come under scrutiny as Maharashtra has seen extreme weather events, leading to increased payouts due to frequent crop loss during kharif season.
Farm leaders have, however, accused insurance companies of making windfall gains via PMFBY.
On November 3, Kumar had sent a letter to Reliance General Insurance Company, accusing it of not adhering to the norms of the scheme. The letter pointed out that the company has received Rs 430.59 crore in premium during kharif 2021.
“The total premium is of Rs 4,512 crore, out of which premium paid to the insurance companies till date is Rs 2,312.22 crore, of which Reliance Corporation has received Rs 430.59 crore. The state and central governments have paid the full amount of first installment of subsidy to the insurance companies,” read the letter.
As per the scheme guidelines, claims have to be settled within one month of the notification date, or within 15 days of claim calculation, in mid-season and in case of localised calamity, respectively.
“As insurance companies have received farmers’ premiums and first installment of subsidy of both state as well as central government, all companies except your company has started payout of the claims,” read Kumar’s letter.
“As your company has collected farmers’ premiums for kharif 2021, raised bills and accepted state as well as central government’s first installment for kharif 2021 payment, linking of kharif 2021 payment issue to kharif 2020 pending issue at this stage is very inappropriate,” read the letter.
Kumar claimed that non-payment of claims has caused anguish to farmers in districts, where the company is in charge of implementing the scheme. He has warned that in case a law and order situation erupts in the districts due to non-payment of claims, the company would be responsible for the same.
In another letter sent to the PMFBY CEO, Kumar has claimed the company has earned a profit from the scheme, given the lowest claims to premium collected percentage in Maharashtra of only 26.55 per cent.
Reliance General Insurance Company, in an email response to The Indian Express, said it has previously settled claims in proportion to the premium received under the scheme. “RGICL has a long-term contract (three years) of implementing PMFBY with Government of Maharashtra (GoM) as per the operational guidelines released by Govt of India. According to these guidelines, the applicable premium subsidy needs to be released to settle the losses. Due to non-receipt of payments, RGICL’s commitments to reinsurers and subsequent claim recoveries have been impacted. RGICL has previously settled claims in proportion to the premium received under the PMFBY scheme.”
RGICL said that in multiple communications, it has requested the Department of Agriculture, Government of Maharashtra, as well as the Union Ministry of Agriculture, to release the “long-pending subsidy” so that it can “speedily clear the farmers’ claims with due support from its re-insurers.”
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