Crop insurance scheme: Penalty for delayed payment in the offing

The new operational guidelines for Pradhan Mantri Fasal Bima Yojna (PMFBY), the government crop insurance scheme, may include penalties for both the insurer and government for delayed payments.

In case the insurance firm delays claim settlement to farmers, they might have to pay penalty. At the same time, if the government delays the release subsidy component to the insurer, the government may have to compensate for the interest accrued due to the delay, government sources said.

"Any delay, be it in the government's release of subsidy, or delay in claim settlement, has a cascading effect. Prompt settlement is crucial in increasing the scalability of the scheme. Thus, the idea of compensation in case of delay is being discussed,” said industry sources.