Government modifies operational guidelines for Pradhan Mantri Fasal Bima Yojna (PMFBY)

New Delhi: The Government has decided to incorporate the provision of penalties for States and Insurance Companies for the delay in settlement of insurance claims under the Pradhan Mantri Fasal BimaYojana (PMFBY). This crucial provision is part of the new operational guidelines issued by the Govt for the implementation of PMFBY.The farmers will be paid 12% interest by insurance companies for the delay in settlement claims beyond two months of prescribed cut-off date. State Governments will have to pay 12% interest for the delay in release of State share of subsidy beyond three months of prescribed cut-off date submission of requisition by insurance companies. The new operational guidelines come at the onset of the rabi season, which starts from 1st of October.

New Delhi: The new operational guidelines also detail a Standard Operating Procedure for evaluation of insurance companies and remove them from the scheme if found ineffective in providing services. The Government has also decided to include perennial horticultural crops under the ambit of PMFBY on a pilot basis. The scheme, as per the new operational guidelines provides add on coverage for crop loss due to attack of wild animals, which will be implemented on a pilot basis. Aadhaar number will be mandatorily captured to avoid duplication of beneficiaries.

In order to ensure that more non-loanee farmers are insured under the scheme, apart from various awareness activities being scheduled, the insurance companies are given a target of enrolling 10% more non-loanee farmers than the previous corresponding season. The insurance companies will have to mandatorily spend 0.5% of gross premium per company per season for publicity and awareness of the scheme.

The new operational guidelines address the current challenges faced while implementing the scheme by putting forth effective solutions. The much demanded rationalization of premium release process has been incorporated in the new guidelines. As per this, the insurance companies need not provide any projections for the advance subsidy. Release of upfront premium subsidy will be made at the beginning of the season based on 50% of 80% of total share of subsidy of corresponding season of previous year as GOI/State subsidy. Balance premium will be paid as a second installment based on the specific approved business statistics on the portal for settlement of claims. Final installment will be paid after reconciliation of entire coverage data on portal based on final business statistics. This will reduce the delay in settling the claims of farmers.

 

NEW PROVISIONS IN THE OPERATIONAL GUIDELINES OF PMFBY:
Provision of Penalties/ Incentives for States, ICs and Banks i.e. 12% interest rate to be paid by the Insurance Company to farmers for delay in settlement claims beyond two months of prescribed cut off date. Similarly, State Govt. have to pay 12% interest rate for delay in release of State share of Subsidy beyond three months of prescribed cut off date/submission of requisition by Insurance Companies.
Detailed SOP for Performance evaluation of ICs and their de-empanelment
Inclusion of Perennial horticultural crops (on pilot basis) under the ambit of PMFBY. (OGs of PMFBY envisages coverage of food and Oilseed crops and Annul Commercial & Horticultural crops)
Inclusion of hailstorms in post harvest losses, besides unseasonal and cyclonic rainfalls
Inclusion of cloud burst and natural fire in localized calamities in addition to hailstorm, landslide, and inundation.
Add on coverage for crop loss due to attack of wild animals on pilot basis with the additional financial liabilities of this provision to be borne by concerned state Govt.
Mandatory capturing of Adhaar number – This would help in de-duplication
Target for Coverage to ICs especially of Non loanee farmers (10% incremental).
Definition of Major Crops, Unseasonal rainfall and Inundati on incorporated for clarity and proper coverage
Rationalization of premium release process: Release of Upfront premium subsidy based on 50% of 80% of total share of subsidy of corresponding season of previous year as GOI/State subsidy at the beginning of the season- Companies need not provide any projections for the advance subsidy. Second Installment – balance premium based on approved business statistics on Portal for settlement of claims and final installment after reconciliation of entire coverage data on portal based on final business statistics on portal.
States allowed to take decision for inclusion of crops having high premium for calculation of L1 calculation and for notification.
Rationalization of methodology for calculation of TY – Moving average of best 5 out of 7 years for calculation of claim amount.
Settlement of claims (Prevented sowing/ on account for Mid season adversity /Localized Claims) without waiting for Second installment of final subsidy.
Yield based claims to be settled on the basis of subsidy provided on provisional business
data.
Separate Budget Allocation for Administrative expenses (atleast 2% of budget of scheme).
Broad Activity wise seasonality discipline containing defined timelines for all major activities to streamlines the process of coverage, submission of yield data and early settlement of claims.
District wise crop wise crop calendar (for major crops) to decide cutoff date for enrolment.
Increased time for change of crop name for insurance – upto 2 days prior to cutoff date for enrolment instead of earlier provision of 1 month before cutoff date.
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More time to insured farmer to intimate individual claims – 72 hours (instead of 48 hours) through any stakeholders and directly on portal.
Timeline for declaration of prevented sowing
Detailed SOP for dispute redressal regarding yield data/crop loss.
Detailed SOP for claims estimation w.r.t. Add on products i.e. Mid season adversity, prevented/failed sowing, post harvest loss and localized claims
Detailed SOP for Area Correction factor
Detailed SOP for Multi picking crops.
Detailed plan for publicity and awareness- earmarked expenditure-0.5% of Gross
premium per company per season
Use of RST in clustering/Risk classification.
Penalties/ Incentives for States, ICs and Banks
Performance evaluation of ICs and their de-empanelment
PIB