The Comptroller and Auditor General (CAG) has announced in its report that the insurance schemes pushed by the government have not achieved much, and have only helped the insurance companies. The same has also been confirmed by another report issued by the Centre for Science and Environment (CAS).
As compared to the premiums charged by the insurance companies, the claims reported were low, and as a result there was a profit of Rs. 10,000 crores cumulatively in April.
As per CSE, in comparison to last year, the gross premium of the insurance companies increased by 32% in 2016-17 reaching Rs. 1.27 lakh crore, with crop insurance accounting for nearly half of the same. Till April, as per CSE, the premium collected was Rs. 15, 891 crores and the claims were only Rs. 5,962 crores, resulting in a profit of almost Rs. 10,000 crores. A major reason behind this low claim settlement is the delay by the state to release their part of the subsidy. Claim settlement also gets delayed when the Centre does not release their share of funds or the states do not complete the crop cutting exercises on time.
The report by CSE said that as compared to the previous crop insurance schemes, the actuarial premium rate that the insurance companies charged were higher than 12.55% also being a cause of higher profits.
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