ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has proposed a thorough reassessment of the “Crop Loan Insurance Scheme” and the “Livestock Insurance Scheme” for borrowers to ensure they genuinely deliver a valuable insurance coverage to farmers.
According to the SECP’s new report on the crop and livestock insurance landscape, , this reassessment/ review should address key challenges, including premium caps, limits of liability, coverage, claims procedures, mandatory implementation, and the adoption of modern methods for animal tagging etc.
Similarly, a review of the Punjab Fasal Beema Scheme is warranted to tackle issues such as premium reimbursement for no claim bonus, streamlining the farmer registration process, engaging more insurance companies in the scheme and updating current yield measurement methodologies.
Livestock Insurance: SECP for establishing insurance pools
Moreover, it is essential to establish a continuous evaluation and monitoring mechanism for these schemes to assess the benefits and challenges faced by all key stakeholders: Insurers, banks, regulators, agriculture departments and farmers. Crucially, the justification of insurance subsidies requires evidence-based principles, necessitating ongoing data collection through monitoring and evaluation processes.
The SECP has also proposed a national-level compulsory crop insurance scheme should be introduced in a piecemeal manner with the following high-level considerations:-
(i); The scheme covers both loanee and non-loanee crop owners, including landowners and tenants, with the provincial agriculture departments determining beneficiary status based on land ownership.
(ii); It encompasses all major crops in Kharif and Rabi seasons throughout Pakistan.
(iii); The insured perils include climatic, natural or biological events affecting crop yield and the period of insurance spans from sowing to harvesting.
(iv); The scheme is built on parametric structure and claims are assessed using technology-based methods of measuring crop cutting experience.
(v); The scheme is implemented through a pool/consortium-based structure by including all willing insurance companies with the required reinsurance arrangement.
(vi); Premium subsidies are based on landholding size and the financing is shared between the federal government and relevant provinces, SECP added.
Copyright Business Recorder, 2024
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