Print Edition - 2014-06-24 | MONEY
Farm insurance becoming popular in Mid-West
Jun 23, 2014-
Agricultural insurance has swelled tremendously in the first nine months of this fiscal year although the total volume has fallen short of expectations, said the Insurance Board.
Insurance coverage reached Rs 245.81 million as of the first quarter while premium collection amounted to Rs 13.22 million recording a massive growth over the same period in the previous year.
During the whole of the last fiscal year, sales of insurance coverage amounted to Rs 23.23 million while premiums worth Rs 1.02 million were collected.
Despite the surge in insurance coverage, it has not grown at the speed anticipated as reflected in the amount of subsidies distributed.
The government spent only Rs 6.6 million out of the Rs 130 million set aside for premium subsidies. The government provides a 50 percent subsidy on premiums for agro insurance.
Due to the slow spending, the Ministry of Agricultural Development (MoAD) has decided to reduce the subsidy budget to Rs 60 million in the next fiscal year.
Kundan Sapkota, deputy director at the IB, said that a greater number of farmers, mainly from the Mid-Western Region, had been persuaded to buy agricultural insurance.
“Although crop insurance has not become very popular, more farmers have been insuring their cattle and other livestock,” said Sapkota. A number of insurance companies have been showing interest in insuring crops in recent days, he added.
According to the IB’s records, the practice of buying insurance has been spreading rapidly with insurance policies worth Rs 145.51 million being sold in the third quarter alone compared to sales of Rs 100.30 million during the first two quarters.
Two years ago, the IB launched a campaign to popularise agricultural insurance by encouraging farmers to insure their crops and livestock to protect them from the vagaries of the weather and the marketplace. The MoAD also announced a 50 percent subsidy on premiums this fiscal year as an incentive.
Meanwhile, the number of companies offering farm insurance has also soared during the review period along with insurance coverage. Out of the 17 non-life insurance companies in the country, 13 have started offering farm insurance. A year ago, only seven companies were engaged in insuring farm products.
NLG Insurance was the largest seller of farm insurance policies. Its sales amounted to Rs 114.62 million or 46.62 percent of the total sales. The company collected Rs 6.15 million in insurance premiums.
Shikhar Insurance and Nepal Insurance held the second and third positions respectively with sales amounting to Rs 51.74 million and Rs 15.88 million.
Sapkota said that there was a need to create awareness among farmers to promote farm insurance. “The data shows that the progress in the sector has been quite satisfactory. Similar programmes in the neighbouring countries have only achieved slow progress too,” he added.
Meanwhile, the insurance companies had settled cattle insurance claims valued at Rs 3.11 million as of mid-March this year. Farmers received compensation for 35 animals that died and infertility problems in six milk cows.
Published: 24-06-2014 09:25