• Definition:Crop insurance refers to an insurance which
insures farmers and crop producers against the
their loss of crops due to natural disasters, such
as hail drought, and floods.
• Yield risk:•
Pest & disease
• price risk :• Influenced by demand & supply factors
To stabilize farm income & investment.
To guard against disastrous effect of crop losses.
Helps to farmers to initiate production activity.
Farmers can grow more profitable crops under
• farmers can adopt improved technologies for
increasing crop production.
• condition of farmers becomes unstable due to
natural calamities & price fluctuation.
First Individual Approach
• introduced in 1972-73 by general insurance
• crop covered:• Initially only cotton H-4
• later ground nut, Wheat, Potato
• States covered:•
pradesh, Gujrat, Karnataka, Maharashtr
a, Tamilnadu, West Bengal.
• Farmers covered- 3110
• premium – 4.54 lakh
• Claims – 37.88 lakh
• Launched by GIC in 1984
• V. M. dandekar suggested suitable approach to
be followed in the schemes.
• It provides insurance cover against a decline
in crop yield below threshold level.
• Based on “Area approach”
• Crops covered:- Cereals, Millets, Oilseeds,
Cotton, Potato & Chickpea.
• only to loanee farmers on voluntory basis
• States covered :- 12 states covered such as
Andra pradesh, Maharashtra, Gujrat, etc.
• farmers covered:- 6.23 lakh
• premium collected:- 195.01 lakh
• claims paid:- 155.68 lakh
• claim ratio:- 79.83%
• premium paid was shared between GIC &
state govt. in ratio of 2:1
Lacking of scheme:
Small & marginal farmers couldnot
participate because farmers have poor access
to institutional credit.
Unit of insurance was very large
Lack of awareness among farmers
Major commercial crops like Cotton
& sugarcane excluded.
Comprehensive Crop Insurance
• this scheme implmented in 1985-1999
• This scheme linked to short term credit
• Implemented based on homogenous area
• CCIS was confined only to farmers who borrowed
seasonal agril. Loan
• CCIS was compulsory for loanee farmers.
• Till kharif 1999, scheme adopted in 15 states & 2
• Salient features:– it covers farmers availing crop loans from financial
institutions, for growing food crops & oilseeds.
– the coverage was restricted to 100% of crop loan
subject to maximum of rs. 10000 per farmers
– Premium rates:- 2% for cereals 7 millets
1% for pulses &oilseeds
Farmers shares of premium was collected at the
time of disbursement of loan
• Burden of Premium and Claims was shared by
Central and State Governments in a 2:1 ratio.
• Farmers covered:- 763lakh
• Premium collected-404 crores
• claims paid-2303crores.
• CCIS were highly skewed towards Gujrat about
(58%) to groundnut farmers.
• Subsidy to small & marginal farmers 50% of
Lackings of the CCIS
• The scheme covers only loanee farmers, leaving
non-loanee farmers who are in majority.
• Covers only food crops, oilseeds and pulses and
other crops are left out.
• Sum insured was maximum to Rs 10,000
• High claims ratio because of low, flat premium
Experimental Crop Insurance
• This scheme introduced in Rabi 1997-98
• Covers small & marginal farmers those who
not borrow from institutional institutes
• Implemented in 14 districts of 5 states
• 100% subsidy provided on premium
• Premium & claims were shared by central &
state govt. in 4:1 ratio
• Farmers covered- 4.78 lakh for sum insured
• Claims paid- 39.78 crore
• Premium collected- 2.86 crore
• This scheme discontinued after one season
• Scheme introduced from rabi season of 1999-2000
• Scheme for both loanees & non-loanees farmers
• Scheme operating on both “Area approach” & “Individual
• Crops covered:- Food grains, Oilseeds, annual horticulture/
• Premium rates:•
Bajara & oilseeds - 3.5%
Other rabi crop
In case of horticultural/ commercial
crops, actuarial rates are being charged.
• Small and marginal farmers are entitled to a subsidy of 50
per cent of the premium charged from them, which will
be shared 50:50 by the central and state governments.
• As against a limit of sum insured Rs 10,000 , sum insured
can be as high as 150 percent of average yield.
• The premium subsidy will be phased out over a period of
• NAIS is a multi agency scheme.
• Central Govt, State Govt, Financial Institution and GIC
will play their roles in implementation.
• Coverage of NAIS:» Initially introduced in 9 states & UT’s covered
5.8 lakh farmers & 7.8 Lakh ha. Cropped area
» Upto 2006-07, scheme covers 21 states & UT’s
» Total farmers covered- 970.8 lakhs
» Total sum assured- 97183 crore
» Total premiums collected- 2944 crore
» Total claims paid- 9857 crore
• This scheme introduced by govt. of India a central
sector scheme as PSSCI in 1999-2000.
• This is the first scheme which provides security to seed
• This scheme covers the Breeders Seed and Certified
seed of all major crops in 10 states
• It covers
Wheat, Paddy, Maize, Bajari, Jowar, Gram, Red
gram, Groundnut, Soybean, Sunflower and Cotton
• PSSCI covers the seed crop at field stage, arising out
of failure, rejection of seed crop, loss in expected raw
seed , loss of seed crop after the harvest
• Covers loss in germination
• Loss in certification stage.
• Also covers non preventable risk like
flood, drought, cyclone etc.
• The sum insured is equivalent to 3 or 5 years average seed
yield multiplied by procurement price/sale price of seed
• premium rates:» 2.0% for Ground nut and Wheat
» 2.5% for Sunflower
» 3.0% for paddy
» 3.5% for Jowar
» 5.0% for
Gram, Redgram, Bajara, Maize, Soybean &
• This scheme introduced in Rabi 2003-04
• Scheme implemented in 21 districts of 13 states.
• A farmers production and price risk for the crop
produced by him, would be protected by ensuring
minimum guaranteed income.
• Initially the programme cover paddy and wheat only.
• A premium subsidy of 75% is proposed to be given in
case of small and marginal farmers and 50% for other
• Upto 2004 total farmers covered under this scheme
• This scheme introduced in kharif 2007
• This scheme covers risk of weather related issues like
rainfall, frost, heat, humidity, etc.
• WBCIS is built upon the weather conditions affect crop
production even when cultivar has taken all the care to
ensure good harvest.
• This scheme run by different private institutions in
• It covers small & marginal farmers
• This scheme compulsory for loanee farmers &
voluntary for non-loanee farmers
• The market for crop insurance in developing is
vast as acerage under cultivation.
• Crop insurance will vary from country to
country depending upon national priorities &
the objectives set & the limitations imposed
under crop insurance scheme.