Rythu Bima extended by one year with enhanced premium

Premium per farmer has been enhanced to ₹3,555.94

The State government has announced continuation of Rythu Bima, the ambitious farmers’ group life insurance scheme, for the second year from August 14 to August 13 next year.

The announcement comes along with the enhancement of the premium payable to the Life Insurance Corporation of India, the public sector insurer.

GST component

Accordingly, the premium per farmer has been enhanced to ₹3,555.94, including the GST component of ₹542.44 for each policy.

This would take the total premium amount covering 31.1 lakh farmers to ₹934.19 crore, ₹200 crore higher than that of the ₹704 crore remitted to the LIC during the previous year.

According to the revised figures, the premium for each farmer would be ₹3,013.5 along with ₹542.44 as the State and Central GST and this is in addition to ₹30.94 crore sought by the public sector insurer towards the additionality incurred on account of stamp duty and other charges.

In the orders issued on Wednesday, the government said the premium had been revised taking into consideration the pricing of mortality experience and stamp duty incurred in the preceding year and GST on premium at the prevailing rates.

Two components

“As the two components are direct payouts from LIC, the public sector insurer factored an administrative charge at the rate of 5% on the mortality premium to meet various fixed and variable expenses on IT and manpower and the expected loss (the loss incurred to premium collected during 2018-19 is approximately 54.42%),” the order said.

In view of this, the LIC informed that it proposed cost-based pricing and not profit-based pricing.

Accordingly, the premium per farmer had been revised as per the proposals submitted by the LIC after negotiations.

LIC payments

The scheme was launched last year covering close to 31 lakh farmers with premium of ₹2,271 per farmer totalling to ₹704.16 crore.

The LIC, however, had to pay ₹794 crore as insurance cover to over 15,880 farmers who died due to various reasons.

Over 25% of the farmers who died during the insured period had land holdings of half an acre or less, according to official figures.

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Printable version | Jul 8, 2020 4:59:26 AM | https://www.thehindu.com/news/cities/Hyderabad/rythu-bima-extended-by-one-year-with-enhanced-premium/article28873067.ece

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