Reliance+10 Private Insurance Companies Make a Killing Off Farmers
THE CITIZEN BUREAU
NEW DELHI: RS 22,000 crores collected by Insurance companies from farmers with bank accounts in 2016-2017; paid Rs 7700 crores to farmers by way of insurance; net profit Rs 14,300 crores. Straight into the pocket of the insurance companies involved in the increasingly lucrative agriculture sector with the farmers paying premiums and incurring yearly losses.
Agricuture expert Devinder Sharma has no doubt at all that the current scheme is weighed entirely on the side of the eleven private and a few public sector insurance companies who have aggressively entered the agriculture sector. What we are seng, he says, “is privatisation of profit and socialisation of cost” with the state governments picking up the bills for what the insurance companies should have been spearheading.
Sharma identifies the modus operandi of the insurance companies in a sector that is fast growing as a three pronged strategy:
- In the cities a person insures his house, it burns down, the insurance company comes in assesses the value of that house, and pays up. In the case of the farmer, the company insures the land, but when it comes to payment insists that it will not value the land on its own, but take a village level average assessment. Earlier this was block level, it has after strong protest been brought to village level, when actually the assessment should be on the basis of the individual farmers land that he/she has insured. The money paid thus is far less, and is very unfair to the individual farmers who pay heavy premiums for this.
- The insurance companies in the cities approach individuals to sell their insurance deed. None of them bother to approach the farmers. And instead go to the bank accounts of the farmers, and draw the premium directly from there. Often the farmers are not even aware this is being done. The premium is deducted from the bank account and paid directly to the insurance company.
- As a result the insurance company does not even know what the farmer is cultivating. It remains unconcerned. Farmers often change the crops, move say from paddy to sugarcane. And the insurance companies operating in the agriculture sector without any real contact with the farmers might have him registered as cultivating paddy. He might have moved to sugarcane since but this is not part of their records. So if he moves for insurance showing sugarcane as his crop, this is stalled by the companies on the plea that the insurance records show him as cultivating paddy.
On all these counts the insured farmers, according to Sharma are suffering. So far there are 90 lakh farmers but the number, he points out, is steadily increasing as the government is now planning to move insurance to even those who do not have bank accounts. The effort is to open maximum accounts for the farmers who then pay premiums without even knowing it, Sharma said. “It is lucrative that soon even the Adani’s will move into this sector,” he said tongue-in-cheek.
The farmers are getting little, and the insurance companies are raking a profit without sinking anything into the business. Sharma was of the view that these could have used the profits to generate employment through crop cutting experiments every season. Instead these are being done by the state governments at their cost, with the insurance companies in the business only to heap profiles. As Sharma said, “the insurance companies are making a killing.” And when the number of farmers in the loop increase, the premiums will also rise, and the profits for the insurance companies will increase.
“They are having the last laugh,” Sharma said. He pointed out that the insurance policy for agriculture needs a major overhaul so that it can benefit the farmers instead of the insurance companies who are being paid for doing nothing for this neglected sector. “What the farmers get is peanuts compared to what they lose,” he said. Sharma said that several middle to low ranking farmers also have got bank accounts now, so this exploitation is not limited to just the better to do farmers.
Sharma has been campaigning on this for a while, more so in Punjab where he lives and works. He said the focus has to shift to the farmers and their welfare in real terms, but does not see any signs of this happening, at least not in the near future.