KATHMANDU, Feb 27: The government spent Rs 6.30 billion to provide subsidies on agricultural insurance to the farmers in the past 12 years since the scheme was launched to boost agricultural production.
The records with the Ministry of Agriculture and Livestock Development (MoALD) show that the amount was provided in premium subsidies for agriculture, crop and livestock insurance over the given time period. Of the amount, Rs 464.89 million was distributed under the ‘others’ heading of agricultural insurance subsidies, while Rs 5.84 billion was provided to insurers of crop and livestock insurance. During the period, the insurers collected premiums of Rs 8.31 billion as they settled claims worth Rs 7.28 billion.
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In the last Fiscal Year (FY) alone, non-life insurers sold policies of Rs 36.84 billion. They collected a premium of Rs 1.70 billion and settled claims of Rs 1.36 billion.
With much hype, the government introduced crops and livestock insurance in January 2013. The Nepal Insurance Authority permitted the insurance companies to issue policies to cover six types of insurance under this category, including various types of crops, vegetables, cereals, fruits, poultry, fishery, cattle and other farm animals.
The regulator even made it mandatory for both life and non-life insurers to sell at least five percent of their policies in micro insurance, including farm insurance.
The government has even assigned certain districts to the non-life insurers, in particular, making them mandatory to carry out the business in the segment. For its effectiveness, the government announced a 50 percent subsidy on insurance premiums, which was later increased to up to 80 percent.
To ensure scientific distribution of subsidies on farm insurance, the MoALD last year issued the 'Guidelines for Providing Subsidies on Crop and Livestock Insurance Premiums, 2025'. According to the guidelines, 80 percent subsidy is provided if the insured amount of crop and livestock insurance is up to Rs 5 million. Likewise, a 65 percent subsidy will be provided if the insured amount is between Rs 5-10 million, and 50 percent subsidy will be provided if the insured amount is above Rs 10 million.
