According to Business Standard, the use of drones, satellite imaging, and big data to combat insurance fraud in the crop and industrial insurance is a positive step. The Centre and the Insurance Regulatory and Development Authority of India are putting out a program to do so. Insurance companies are predicted to lose up to Rs 45,000 crore due to fraud; therefore, even if it’s only for crop and industrial insurance, the loss saved would be nothing to scoff at.
Farmers in Maharashtra’s Beed district have been accused of defrauding insurers to the about Rs 58 crore by claiming crop loss for a bigger region than sown and for plants not sown; in some instances, the farmer will indeed obtain two crop credentials for 2 distinct crops from the officials, sow just one and claim the insurance for the other. Apart from preventing fraud, drone mapping and the satellite imagery can also assist shorten claim payment delays, such as in the instance of industrial disasters where determining the cause of the accident/problem is challenging.
While such technologies will first be adopted on a voluntary basis, the government intends to make them necessary in the future. Under Pradhan Mantri Fasal Bima Yojana, the agricultural ministry conducted pilot research in 2018 to optimize crop-cutting operations utilizing remote sensing and satellite data. The knowledge gained from these projects assisted the implementation of smart sampling based on satellite data in about 96 districts across nine states in 2019. Though drones, artificial intelligence, and other technologies have been used in crop area estimating and yield prediction pilots, the government has yet to embrace any particular tech-aided technique for the main farm insurance policy.
The stakes are particularly high when it comes to the fraud, given that the government farm insurance plans for kharif 2021 comprise more than 23,600 hectares of the cultivable land and approximately 1.5 crore farmers—which is down from more than 2.1 crore farmers in the year 2018—with a payment of over Rs 16,800 crore and an amount covered of Rs 94,470 crore. In fact, fraud raises the expense of insurance for legitimate insurance seekers—the majority of whom are small and marginal farmers—and has an impact on insurers’ operations (due to the lower attractiveness of higher premiums).
As a result, deploying technology that can eradicate fraud, combined with Aadhaar seeding like an added layer of safety, will only assist the crop insurance environment in the long run and boost demand for it. The sooner the government mandates drones, satellite imaging, and other similar technologies, the better. Keep in mind that the farm sector’s loan to GVA ratio has increased from 21 percent in FY08 to 60% in FY20. While improved credit infiltration in the industry is welcome, the truth that the sector is beset by uncertainties, ranging from pricing to the adequacy and promptness of the monsoons, implies that increasing the activity’s leverage also introduces a new risk—one that could drive desperate farmers to desperate measures.