Why Farmland Insurance Is No Longer Optional

Climate volatility has made farming riskier than at any point in recent decades. But beyond weather, the financial case for insurance is straightforward:

• Income from agricultural land is fully tax-exempt under Section 10(1) of the Income Tax Act — meaning every rupee you protect through insurance is a rupee of tax-free income.
• Since PMFBY launched in 2016, ₹1.83 lakh crore in claims have been paid out to farmers — five times the total premiums collected.
• India’s crop insurance market is projected to grow from USD 4.56 billion in 2024 to USD 8.21 billion by 2032, indicating rapidly increasing adoption.
• From Kharif 2024, insurers who delay payments automatically incur a 12% annual penalty — giving the system real teeth for the first time.

Part 1: Government Schemes — The Most Affordable Option

1. Pradhan Mantri Fasal Bima Yojana (PMFBY)

PMFBY is the cornerstone of India’s agricultural insurance architecture. Launched in February 2016, it is currently the largest crop insurance scheme in the world by farmer enrollment and the third-largest by premium volume.

How it works: The scheme follows a “One Nation, One Crop, One Premium” principle. Farmers pay a capped premium and the central and state governments jointly subsidise the remainder. There is no upper limit on the government subsidy.

Premium rates (farmer’s share only):

Example: If your crop is valued at ₹50,000, you pay just ₹1,000 (2%) for Kharif coverage. The government pays the remaining ₹9,000 in premium subsidy, and your full ₹50,000 is protected.

What’s covered:

• Natural disasters: drought, flood, hailstorm, cyclone, landslide, lightning
• Pest attacks and crop diseases
• Post-harvest losses (rain or hail within 14 days of harvest)
• Prevented sowing (inability to plant due to weather)
• Mid-season adversity
• From 2025: wild animal damage and waterlogging are newly added

New 2025 enforcement rule: If the state or insurer delays claim payment, a 12% annual penalty is automatically charged to the defaulting party and credited to the farmer. From Kharif 2025, states must maintain an ESCROW account with advance premium deposits, ensuring faster disbursals.

Scale: Over 4.19 crore farmers were enrolled in 2024–25 — the highest since inception. Since 2016, 78.4 crore farmer applications have been insured in total.

How to enrol:

• Via your nearest bank branch or Kisan Credit Card (KCC) account
• Through Common Service Centres (CSC) in your village or block
• Via the National Crop Insurance Portal (NCIP) — pmfby.gov.in
• Through empanelled insurance companies in your district

Eligibility: All farmers growing notified crops in notified areas — including sharecroppers and tenant farmers (where state rules permit).

2. Restructured Weather Based Crop Insurance Scheme (RWBCIS)

RWBCIS runs alongside PMFBY and uses a fundamentally different approach. Instead of measuring actual crop yield loss, it uses weather parameters as a proxy — when rainfall, temperature, wind, or humidity deviates beyond a pre-defined threshold, compensation is triggered automatically.

This makes RWBCIS particularly useful for:

• Crops for which standard yield estimation is difficult
• Areas prone to drought or unseasonal rains where yield measurement is disputed
• Farmers who want faster, less bureaucratic claim settlements

The Union Cabinet approved continuation of both PMFBY and RWBCIS until 2025–26, with a combined outlay of ₹69,515.71 crore for the period 2021–22 to 2025–26.

Premium rates under RWBCIS mirror PMFBY — capped at 2% for Kharif, 1.5% for Rabi, and 5% for horticultural crops, with the balance subsidised by government.

Part 2: The Government-Backed Specialist — Agriculture Insurance Company of India (AICIL)

Agriculture Insurance Company of India Ltd (AICIL), popularly known as AIC of India, is the only dedicated government-owned agricultural insurer in the country. It was established specifically to promote crop insurance adoption and protect rural livelihoods.

Key features:

• Operates across all states and union territories
• Administers PMFBY, RWBCIS, and standalone products
• Covers crop insurance, weather-indexed products, and livestock insurance
• Has been expanding into comprehensive rural insurance covering aquaculture, animal husbandry, and farm equipment
• Partners with India Post Payments Bank (IPPB) for rural outreach and distribution

Why consider AICIL: As a government body, it carries the lowest counterparty risk of any insurer and has the deepest rural network — particularly important for farmland in remote or tribal areas where private insurers may have limited presence.

Website: aicofindia.com

Part 3: Private Insurance Providers — Innovation and Technology

Eighteen private insurance companies currently participate in PMFBY implementation, selected through competitive bidding at the cluster (group of districts) level. This competitive process has driven down premiums and raised the quality of claim settlement. The key private players active in farmland and crop insurance are:

3. HDFC ERGO General Insurance

HDFC ERGO has positioned itself as the technology leader in agricultural insurance. It uses machine learning algorithms for risk assessment, ensuring faster and more accurate compensation. Its mobile application allows farmers to submit claims instantly and track status in real time. The company collaborates with agricultural research institutes to develop predictive analytics for crop failure forecasting.

Best for: Farmers and landowners who prefer tech-enabled policies and want fast, app-based claim processing.

4. Bajaj Allianz General Insurance

Bajaj Allianz is a joint venture between Bajaj Finserv and Allianz SE, one of the world’s largest insurers. In the agricultural space, it offers index-based insurance policies that use satellite imaging and weather data analytics to improve claim accuracy and speed. Coverage extends to drought, floods, pests, and market price fluctuations.

Best for: Farmers seeking comprehensive coverage across multiple agricultural risks with strong customer service.

5. ICICI Lombard General Insurance

ICICI Lombard is one of India’s largest private general insurers and actively participates in PMFBY across multiple states. It uses GIS-based technology for crop loss assessment and has a wide distribution network through bank branches, agents, and its digital platform.

Best for: Farmers who already bank with ICICI and want seamless integration of insurance with their existing agricultural credit.

6. SBI General Insurance

A collaboration between two financial powerhouses, SBI General offers PMFBY and RWBCIS products through SBI’s extensive branch network — one of the largest banking footprints in rural India.

Best for: Farmers with existing SBI Kisan Credit Card accounts, for whom enrolment is practically automatic at the time of loan renewal.

7. IFFCO-Tokio General Insurance

IFFCO-Tokio is a joint venture between the Indian Farmers Fertiliser Cooperative (IFFCO) and Tokio Marine, Japan. Its deep roots in India’s cooperative farming system make it a trusted name among farmer communities. It covers crop insurance along with farm equipment and personal accident policies.

Best for: Farmers who are members of IFFCO cooperatives or farmer producer organisations (FPOs).

8. Reliance General Insurance, Tata-AIG, Future Generali & Universal Sompo

These insurers also hold empanelment under PMFBY and participate in district-level bidding for crop insurance contracts. Their availability in your specific district depends on which company won the bidding contract for that season in your state. Check the PMFBY portal or your state agriculture department to confirm which company is active in your area.

Part 4: Digital-First and Niche Platforms

9. Kshema General Insurance

Kshema is India’s fastest-growing fully digital crop insurance company, specialising in market price fluctuation coverage alongside standard weather and yield risk. It covers 100+ crops across India and has processed over 5 lakh farmer enrolments, facilitating claim settlements worth ₹500 crore in a single season.

Kshema works primarily through the PMFBY and RWBCIS framework but leads with a digital-first approach — policy purchase, claim submission, and tracking all happen through its app.

Website: kshema.co

Best for: Younger farmers, farmland investors, and non-resident landowners who want fully digital policy management.

10. Stratfin Agriculture Insurance

Stratfin works as an insurance intermediary with tie-ups across ICICI Lombard, HDFC ERGO, Bajaj Allianz, SBI General, and New India Assurance, along with government schemes. It compares multiple insurer quotes for different farm sizes and crop types and offers pan-India service.

Best for: Buyers who want to compare options across multiple insurers and government schemes before committing.

Premium at a Glance: What Will Insurance Actually Cost You?

For government-backed schemes, the farmer’s premium above is the maximum. The actual actuarial premium is higher, with the balance paid by state and central governments.

How to Choose the Right Insurance for Your Farmland

Step 1 — Check if your crop and village are notified under PMFBY. Visit pmfby.gov.in, select your state, district, and season, and confirm your crop is listed. PMFBY only covers notified crops in notified areas.

Step 2 — Identify the implementing insurer in your district. The state government selects an insurer for each cluster of districts through competitive bidding. Your bank branch or the state agriculture department website will tell you which company is implementing PMFBY in your area for the current season.

Step 3 — Enrol before the cut-off date. Kharif and Rabi seasons each have distinct enrolment deadlines set by the state. Missing the date means waiting for the next season.

Step 4 — If you want additional coverage beyond what PMFBY covers (equipment, livestock, personal accident), approach IFFCO-Tokio, HDFC ERGO, or Bajaj Allianz for standalone add-on policies.

Step 5 — For digital-only management, consider Kshema, which lets you buy, manage, and claim entirely through an app.

Common Mistakes to Avoid

• Assuming insurance is automatic if you have a KCC loan — confirm with your bank branch each season that your enrolment has been processed.
• Not updating sowing details on the portal — if the crop you actually planted differs from what is registered, claims may be rejected.
• Ignoring the village notification list — if your village is not notified for a crop, PMFBY will not cover it that season.
• Relying solely on PMFBY for all risks — PMFBY covers yield and weather risk but not equipment damage, worker accidents, or livestock loss. These need separate policies.

Final Word

Farmland insurance in India has never been more accessible or more affordable, thanks to heavy government subsidy under PMFBY and RWBCIS, and the growing presence of technology-driven private insurers. The challenge is no longer cost — it’s awareness and timely enrolment.

Whether you are an active farmer, a farmland investor in a city, or an NRI with inherited agricultural land, there is a policy structure that fits your situation. Start with PMFBY for crop risk, layer in a private policy for equipment or livestock if needed, and use platforms like Kshema or Stratfin to compare and manage everything digitally.

One bad season without insurance can undo years of return. One enrolment — sometimes costing less than ₹1,000 — can protect an entire harvest.