Source: BS
Context:
India’s crop insurance sector is witnessing a sharp decline in premium collections in FY26 due to structural reforms, aggressive pricing, and re-tendering by states. The trend raises concerns about the sustainability of insurers under the current loss-sharing models.
Key Highlights:
- Major Insurer Performance:
- Agriculture Insurance Company of India (segment leader): ₹2,539 crore, down 4% YoY.
- State Trends:
- Maharashtra’s crop insurance premium dropped sharply from ₹9,000 crore earlier to ~₹3,000 crore.
- Other states may follow re-tendering practices, further reducing premiums.
- Pricing & Models:
- Farmers’ share of premiums remains capped under PMFBY:
- Kharif crops: max 2% of sum insured.
- Rabi crops: max 1.5%.
- Commercial/horticultural crops: max 5%.
- Balance subsidised by Centre & states.
- Risk-sharing frameworks include:
- Cup & cap model (80:110 / 60:130) – refunds to state treasury if claims < threshold; Centre/state share burden if claims exceed upper cap.
- Profit-loss sharing model – government subsidy partly refunded to state if claims below a certain level.
- Farmers’ share of premiums remains capped under PMFBY:
