Kathmandu, April 21

Premium collection from sales of agricultural insurance products surged by a whopping 124.67 per cent in the first six months of the current fiscal year, as subsidy being extended by the government prompted many to buy these schemes.

Non-life insurance companies generated Rs 109.28 million from sales of these products in between mid-July and mid-January, show the data of the Insurance Board (IB), the insurance sector regulator. This premium amount provided protection to assets worth Rs 2.27 billion.

In same period of the last fiscal, insurers had sold agricultural insurance products worth Rs 48.64 million, covering risk of Rs 893.43 million.

“The main reason for rise in demand for these products is subsidy that the government is extending upon purchase of agriculture insurance policies,” IB Deputy Director Kundan Aryal told The Himalayan Times.

The government has been providing subsidy equivalent to 75 per cent of the premium amount to encourage people to purchase agricultural insurance products.

In the first six months of the current fiscal year, the government extended Rs 81.96 million in subsidy.

Non-life insurance companies have been selling various agricultural insurance products to cover the risk related to production of crops, including paddy, vegetables and fruits, poultry, livestock and fisheries ever since the IB introduced Crops, Livestock and Poultry Insurance Directive in January 2013.

Of these insurance products, schemes on livestock insurance are becoming popular lately.

In the first six months of the current fiscal year, non-life insurers generated Rs 95.52 million by selling livestock insurance products. The revenue collected from sales of these schemes is 87.41 per cent of the total income generated from sales of all agricultural insurance products, show the IB data.

“Rising demand for livestock insurance product is good news. But we have now started to notice that risk is continuously building in the livestock sector. This can be seen through number of claims, which is continuously rising and has now reached an alarming level,” said Aryal.

Insurers spent Rs 53.89 million to settle claims related to livestock sector in the first half of this fiscal year alone. This amount is 98.4 per cent of total money spent by insurance companies to settle all the claims of agriculture sector.

Most of these claims, as per sources, are not being filed by individual farmers but organised businesses. Considering this, the IB is now planning to conduct a comprehensive study on the matter.