Beyond Spending: Making Farm Insurance Work

For 12 years, the government has spent Rs 6.30 billion to subsidise farm insurance premiums. The aim was simple — to protect farmers from losses and encourage them to produce more. Records from the Ministry of Agriculture and Livestock Development show that Rs 5.84 billion went to crop and livestock insurance, while Rs 464.89 million was allocated to other farm insurance categories. During this period, insurers collected Rs 8.31 billion in premiums and paid Rs 7.28 billion in claims. In the last fiscal year alone, non-life insurers sold policies worth Rs 36.84 billion, collected Rs 1.70 billion in premiums, and settled Rs 1.36 billion in claims. The scheme began in January 2013 with much publicity. The Nepal Insurance Authority allowed companies to issue policies covering crops, vegetables, fruits, cereals, poultry, fisheries, cattle and other farm animals. Insurers were required to allocate at least five percent of their policies to microinsurance, including farm insurance. The government initially offered a 50 percent premium subsidy, later raising it to as much as 80 percent. Last year, the Ministry introduced the Guidelines for Providing Subsidies on Crop and Livestock Insurance Premiums 2025. Under these rules, farmers who insure up to Rs 5 million receive an 80 percent subsidy; those insuring between Rs 5 million and Rs 10 million receive 65 percent; and those above Rs 10 million receive 50 percent.