Claim Settlement Efficiency of Crop Insurance in India: A Comparative Study of Public and Private Sector Insurers under PMFBY with Special Reference to Karnataka

Crop insurance is the main financial safety net for Indian farmers against natural calamities, and the completeness and speed of claim settlement decide how quickly farmers recover from a loss. Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), launched in 2016, the scheme is implemented by public and private sector general insurers selected by State Governments through bidding. This study compares public and private insurers on several indicators of claim settlement efficiency, with special reference to Karnataka: claim ratio, claim settlement ratio, unsettled admissible claims, settlement status at a fixed date, claims settled as a share of claims filed, and pending claims. It uses secondary data from the 29th Report of the Parliamentary Standing Committee on Agriculture (2021), Rajya Sabha replies released by the Press Information Bureau, and official PMFBY statements. Company-wise data of 18 insurers for 2016-17 to 2019-20, a period before the Kharif 2020 revamp of the scheme, are analysed using Welch's t-test, the Mann-Whitney U test, permutation and bootstrap checks, and a regression controlling for portfolio size. Public sector insurers paid 95.3 per cent of gross premium as claims during 2016-17 to 2018-19, against 77.6 per cent for private insurers; the difference in mean company-level claim ratio is significant at the 10 per cent level (p = 0.065) but not at 5 per cent, and the regression estimate is sensitive to individual insurers. Once claims were admitted, both sectors settled about 97 per cent of them, but settlement status at a fixed date varied widely across companies. In Karnataka, the claim ratio of public insurers exceeded that of private insurers in every year, and the gap persists after standardising for year. Karnataka also had very low pending claims as of June 2025. Data on processing time, rejection and farmer satisfaction are not publicly available, so published farmer surveys are reviewed and a primary survey design is proposed. The paper suggests risk-balanced clustering, company-wise public disclosure including claim timelines, and stronger enforcement of the 12 per cent penalty for delay

Crop Insurance, PMFBY, Claim Ratio, Claim Settlement Efficiency, Multi-indicator Assessment, Public and Private Insurers, Karnataka

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