IB introduces seed crop insurance policy

The Insurance Board (IB), the insurance sector regulator, has introduced seed crop insurance policy to provide protection to seed producers against losses inflicted by pests, diseases, adverse weather conditions, natural disasters and other accidents. The insurance policy, which has been strictly designed for those who grow seeds of all types of cereal crops in bulk, has been circulated among non-life insurance companies. “These insurers will now have to sell policies accordingly,” said IB Deputy Director Kundan Sapkota. These insurance policies can be purchased upon paying a premium equivalent to five per cent of the sum insured. This means if seed producers wish to provide cover to Rs 100 worth of yield, they have to pay a premium of Rs five per year. Once the premium is paid, policyholders will be entitled to compensation of up to 90 per cent of the sum insured. “One of the beauties of this product is that compensation will be extended based on projected yield,” said Sapkota. “This means if producers fail to harvest the quantity of seeds projected at the time of purchasing the insurance policy, they can file a claim and demand for compensation.” Also, the insurance policy covers losses triggered by fires, lightening, earthquakes, floods, droughts, landslides, cyclonic storms, hailstorms, snow, sleet, other disasters, pests and diseases. But to be eligible for compensation, seed production should be conducted in at least a hectare (30 kattha) of land in the Tarai and inner Madhes, and at least 0.5 hectare (10 ropanis) of land in the hilly region. The IB has, however, allowed farmers to pool land to meet the minimum land threshold and become eligible for the insurance scheme. The productivity of the land located in Tarai, inner Madhes and hilly region will be fixed on the basis of data provided by the Ministry of Agricultural Development, while price of the projected yield will be calculated based on statistics provided by National Seed Company. Based on these parameters, insurance companies will extend 50 per cent of the sum insured in compensation if losses are incurred within 15 days of plantation. If losses are incurred within 16 to 45 days of plantation, 70 per cent of the sum insured will be provided in compensation. But on losses incurred after 70 days of plantation, compensation to the tune of 90 per cent of the sum insured will be provided based on shortfall in final production. Once the seeds are harvested, seed producers can also purchase insurance scheme to provide cover to seeds that have been stored. For this, another 2.5 per cent of the sum insured has to be paid in premium, according to the IB. Source: The Himalayan Times