animals in disasters

Livestock Insurance: Farmer Compensation Schemes or Animal Welfare Illusions?



Despite attractive terms used, the insurance schemes offered for animals are yet to make its relevance in the Indian scenario.

What is an insurance?

Insurance is a means of protection from an unexpected loss. It is a kind of risk management approach primarily focused on transferring the unavoidable risks to cope with any given situation. The loss may or may not be financial, but it is usually reduced to monetary terms. In India, the overall insurance penetration is only 3.69%, providing a substantial underserved market. This provides vast scope and opportunities for the insurance industry to intervene by increasing awareness, promoting innovative products, and introducing more distribution channels.

The livestock insurance

In the given context, livestock insurance is still in a very early stage in India and struggling to find the right service delivery mechanism that could suit the local needs. Services are being offered by companies in the name of livestock insurance to protect farmers against the loss of their animals. However, most of the services under the livestock insurance schemes are enticing welfare benefits the farmers could avail and don’t directly benefit the livestock or address the welfare needs of animals in any way.

 Thousands of livestock are lost due to disasters

India is the largest producer of milk in the world contributing 16% to the global milk and the value of milk in terms of monetary value is much more compared to the value of wheat and rice put together. However, crop insurance has been receiving a lot of attention, but the risk coverage for livestock has been clearly ignored and not seriously taken up or addressed. Adding to the misery every year, thousands of livestock are lost due to disasters, and the compensation that is provided in a few states is 2-3 times lower than the actual value for replacing the animal.


Challenges for the farmers

Despite attractive terms used the insurance schemes offered for animals are yet to make its relevance in the Indian scenario. Even a few states that have started insurance for animals have very few animals insured and states like Haryana, Uttar Pradesh, and Rajasthan are yet to even insure a single animal till date. There are several challenges for the farmers to even claim the insurance benefit after incurring loss as they need to provide a death certificate from a qualified veterinarian, post-mortem examination report and radio-frequency identification chip, which is inserted in the front left leg at the time of insuring the animal making the process even more complicated for the poor farmers.

Crop insurance

In case of crop insurance, the scheme is compulsory for farmers and banks deduct the premium from their Kisan Credit Card account[1], but the animal insurance scheme is optional, and Banks are not involved in livestock insurance. In addition to this, the farmers lack awareness of the scheme and they are unaware of the procedures to be followed. The governments, insurance companies, and banks need to play an important role to popularize insurance schemes for comprehensively addressing the animal welfare issues and benefit farmers and not be seen merely as measures to compensate only for their losses.


Providing insurance coverage for the health and welfare of animals

The private sector encompassing corporates, banks and insurance companies have a greater role to play in filling this vacuum on providing insurance coverage for the health and welfare of animals. The animal sector is so diverse; therefore, the insurance agencies need to consider the risks that could affect animals in the farms, animals in the wild, animals in captivity in addition to ensuring the welfare of livestock and pets owned by people for their livelihood and companionship.