Addressing the delays in settlements of claims under PMFBY
The operational guidelines of the Pradhan Mantri Fasal Bima Yojana (PMFBY) prescribe the timeline of two months of completion of Crop Cutting Experiments/harvesting period for settlement of claims by insurance companies. This timeline is subjected to conditions like timely release of subsidy and yield data to the insurance companies.
Reasons for the delay in settlement of claims
One of the biggest drawbacks in the PMFBY was the delayed settlements of claims. The main reasons for the delay were:
- Delayed transmission to yield data.
- Dispute raised by Insurance Companies on yield data.
- Reconciliation of individual farmer data on the portal by bank branches.
- Late release of their share in premium subsidy by some States.
- NEFT related issues.
Revised guidelines to overcome the delays
The government has comprehensively revised the Operational Guidelines of the PMFBY scheme to ensure better transparency, accountability and timely payment of claims to the farmers. The following provisions have been made in the operational guidelines:
- Provision of 12% interest rate per annum to be paid by the Insurance Company to farmers for any delay in settlement of claims beyond 10 days of prescribed cut off date for payment of claims.
- State Governments are required to pay 12% interest rate for delay in the release of the State share of Subsidy beyond three months of prescribed cut off date/submission of requisition by Insurance Companies.
Pradhan Mantri Fasal Bima Yojana (PMFBY)
Pradhan Mantri Fasal Bima Yojana (PMFBY) is the government-sponsored crop insurance scheme that integrates multiple stakeholders on a single platform. It was supposed to provide a breakthrough by enhancing the coverage of the crop insurance and protect the farmers from the vagaries of the monsoon.
Under the scheme, there is a uniform premium of 2% to be paid by farmers for all Kharif crops, 1.5% for all Rabi crops and 5% in case of annual commercial and horticultural crops. The balance premium would be paid by the government. The scheme is being implemented in an area-based approach.