Global Economy

Reliance General Insurance's refusal to pay crop claims can become a law & order issue, Maharashtra tells Centre


Reliance General Insurance Company (RGICL) has refused to pay insurance claims to Maharashtra farmers under the central crop insurance scheme for kharif 2021 season, prompting the state government to write to the Centre saying it could become a law and order issue.

“Other five insurance companies have paid about 90% of the mid-season and localised calamity claims. Reliance has not even completed the claim calculation process,” said Vinaykumar Awate, state chief statistical officer (agriculture).

RGICL, which covers 10 districts of Maharashtra under the Pradhan Mantri Fasal Bima Yojana (PMFBY), in its correspondence with the state commissioner (agriculture), had said it “has constraints towards disbursements of kharif 2021 claims before settlement of kharif 2020 and rabi 2020 claims”.

In a letter to the central government, Maharashtra agricultural commissioner Dheeraj Kumar said, “The claims percentage to premium paid ratio is lowest for Reliance at 25.55% amongst all the six insurance companies.”

In comparison, the payout ratio of Oriental Insurance is 163%, Bajaj Allianz General Insurance at 148%, IFFCO-Tikoo at 39%, HDFC-Ergo at 42 %, and Bharti AXA General Insurance at 45%.

“This shows that Reliance General Insurance Company is deliberately avoiding payments to farmers on some pretext or other, is wilfully suppressing losses occurred to avoid payments to farmers, and is resorting to total unethical and corrupt practices to tarnish the name of PMFBY and denying benefits of the scheme to the farmers,” Kumar alleged in the letter dated November 1.

RGICL claimed that as per the operational guidelines released by the Centre, applicable premium subsidy needs to be released to settle the losses under its three-year contract of implementing PMFBY with the Maharashtra government.

“Due to non-receipt of payments, RGICL’s commitments to reinsurers and subsequent claim recoveries have been impacted. RGICL has previously settled claims in proportion to the premium received under the PMFBY scheme,” it said in an email response to ET.

The company said it has in multiple communications requested the state “to release the long-pending subsidy so that it can speedily clear the farmer claims with due support from its reinsurers”.

Maharashtra in its letter to the Centre claimed that RGICL has earned a huge profit of about Rs 2,285.46 crore under the crop insurance scheme in the state in the last five years.

Meanwhile, 2020 kharif and rabi season claim settlements are pending partially with insurance companies saying they can settle claims of only those farmers who had raised intimations within the stipulated time frame.

The state government said most farmers could not raise intimations in time las year due to restrictions to check the spread of the Covid-19 pandemic.

Despite having similar rain pattern as in 2019 and 2021, the number of claim intimations in 2020 were only 512,061. Whereas, the number of intimations raised in the kharif seasons of 2019 and 2021 were 5,446,771 and 3,843,147, respectively.

“It was mainly due to Covid restrictions,” the state said in its letter to the Centre. “The toll-free numbers of insurance companies were not working, neither did they tell farmers about raising intimations through app or the portal, which was the key responsibility of the newly inducted companies, including RGICL,” it said.

“The matter (of pending subsidy of kharif and rabi 2020) is still pending to be resolved before state grievance redressal committee, and RGCIL is at wrong side of guideline to use this to decline loss payments to farmers for kharif 2021,” the state said in the latter.

“The farmers who participated in the RGICL insurance scheme in 2021 kharif season are different than those who participated in the 2020 season. Hence it will be injustice to current season’s farmers to link current year’s claim payment to previous year’s premium release,” Awate said.

The agriculture department, in its letter to the Centre, alleged that RGICL creates awareness among farmers only to get them enrolled in the scheme. Once a farmer has deposited his premium, no publicity or awareness campaign is taken to brief farmers on how to register intimations, lodge complaints. how loss percentage is calculated, etc., it said.

As per the guidelines, lodging of intimations for claims by insured farmers or the designated agencies is not essential for losses due to widespread calamities, the state said. ‘Only with the intention to save money and to hoodwink farmers, all insurance companies, including RGICL, deliberately avoided observance of this guideline,” it alleged.

The state government also alleged in the letter that Reliance General Insurance Company has violated many operational guidelines like not setting up offices at block levels, generating awareness among farmers, etc.



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