Crop Insurance Premiums Fall 34% in FY26

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.