Agricultural insurance has failed to take off in Ilam due to lack of knowledge among farmers and lackluster efforts on the part of government officials and insurance companies.

The government provides a 75 percent subsidy on insurance premiums, but farmers either seem to be unaware of the benefits of insuring their agro and livestock products or put off by the hassles involved in buying insurance and filing claims.

Non-life insurers have been marketing various agricultural insurance schemes since the introduction of the Crops, Livestock and Poultry Insurance Directive in January 2013. These schemes can be purchased by paying an annual premium of 5 percent of the assessed value of the crops and livestock.

Although billions of rupees have been invested in agricultural products and livestock in Ilam, farmers are not keen on buying insurance to protect the investments. 

Dearth of awareness related to agro and livestock insurance in the district has been attributed to lack of funds with the responsible local bodies, slow distribution channels of the insurance companies, and also insufficient efforts by the District Agricultural Office (DAO) to promote agricultural insurance.

Head of the DAO Ram Baran Shah said, “The small budget allocated to the local units responsible for implementing agro subsidies has contributed to the low effectiveness of government in promoting agro insurance.”

Some farmers are also discouraged from purchasing farm and livestock insurance schemes due to the complex and lengthy paperwork.

A farmer wishing to purchase a crop or livestock insurance policy is required to submit a photocopy of the citizenship certificate and the proposal form. The insurance company assigns a representative to monitor the crops or livestock and assess the value of the insured property according to the guidelines of the government and recommendations of experts.

If an insured farm animal dies, the owner receives 90 percent of the assessed value. If the animal is disabled, the owner receives 50 percent, and if the animal is sterile, the owner receives 30 percent. If an insured crop is damaged, compensation of up to 90 percent of the assessed value is disbursed only after the supervision of experts. Farmers complain that the insurance claim process is cumbersome. To receive insurance money for a dead farm animal, farmers need to inform the company through a written notice within three days. They also have to submit pictures of the dead animal along with recommendations from both the local unit and the branch of the Animal Service Office.

Neco Insurance Company (NIC) is the only insurance company operating in the district through 12 insurance agents. Many farmers bought policies and claimed insurance for ginger during the last fiscal year, the company said.

The company has been insuring cows and buffaloes in the district, although it also offers insurance coverage for other animals like horse, mule, sheep, goat and pig. In the first six months of this fiscal year, it insured 1,012 cows and 67 buffaloes.

NIC also operates in other districts like Jhapa, Panchthar, Taplejung and Morang. A company official said that some farmers created problems by filing claims for an amount higher than the insured value.

Sarbagya Khatiwada, an agricultural expert associated with NIC, said, “We offer insurance services to farmers within the governmental framework and existing rules.” He said that insurance money was disbursed to 13 clients in Ilam during this fiscal year.

According to rules issued by the Insurance Board, an autonomous regulatory agency of the country, insured clients have to settle claims within 30 days of submitting the documents.