Cattle Insurance: The Untapped Market in India

Cattle Insurance: The Untapped Market in India

Cattle are considered one of the foremost valued possessions of the agricultural community in India. Marginal, small, and medium farmers earn a considerable portion of their income from cattle rearing and allied activities like the selling of Milk. Since the livelihood of farmers depends on such a lot, it becomes important to ensure the cattle for comprehensive coverage against cattle diseases or any unforeseen events like the untimely death of cattle. Cattle insurance is another endeavor of the govt of India to guard the agro-based economy of the country.

What is Cattle Insurance? 

Cattle insurance protects Indian rural farmers from the financial loss incurred due to untimely death or disability of their cattle. The value of cattle is high and their loss can force farmers to fall into a debt cycle as they will not be able to sell milk or use their cattle to work on farmlands. With cattle insurance, farmers will get total protection against cattle loss. The agencies ensure the cattle of the rural farmer against a yearly or quarterly policy premium as pre-decided by agencies under different policies which farmer has to pay. Once the farmer pays the first premium his cattle are covered under insurance and the risk of an untimely death or permanent disability of cattle is transferred to insurance providing agency.

 

Why Livestock Insurance?

 

Raising cattle, sheep or poultry is a risky business – especially if you do not own a herd or flock but only one or a few animals. The biggest risk is disease. This can decrease the production of meat or milk and, in the worst case, result in the death of the animals. If there is only one animal on the farm, as is often the case in India, this is a huge exposure. Diseases trigger cost. The direct cost incurred is in the treatment of the animal. Additionally, there is the loss-of profit if the animal products can no longer be offered for sale, or the cost associated with buying products the owner normally procures from his animals. A wider cost can be a loss of market share should buyers switch to other providers. Finally, but just as important, buying new animals costs money. Shouldering this cost as well is very burdensome for many farmers. Another set of risks has to do with as shortage of fodder. The monsoon determines how much is available in the country. If the rains fail, supplies drop at a time when farmers are most in need. At the same time, falling production due to underfed animals makes it more challenging to secure the revenues necessary to cover rising prices in the fodder market. In breeding farms, there is also the risk that the production of higher yielding animals is not successful. India still has plenty of room to increase animal productivity by switching to better breeds of animals. If these new breeds underperform, this is a risk to the breeders These risks become even more serious if the sector grows and changes. The growing number of urbanites in India will mean city dwellers becoming increasingly dependent on accessing animal products from the countryside. To meet this demand many smallholders in India will, over time, need to develop into commercial farmers, and sell the surplus they make to the growing cities. Transforming subsistence farming into an agricultural enterprise also means that farmers will become more aware of the risks they face because livestock failure will be tantamount to business failure. To protect their revenues, the coming decades will see them looking increasingly to insurance as a means to deal with business risks. Average annual losses calculated due to diseases like Foot & mouth diseases 74.3%, Haemorrhagicsepticaemia 19.2%, Black quarter 5.2 % and Anthrax 1.3 % in cattle during 1991-2005 time periods. Insurance as the key risk transfer must adapt to the coming reality of more commercial farming in India. A simple look at the numbers reveals how big this challenge is. In 2012, 41.8 – 62.7 million cattle could have been insured. In2009, less than 7% of the cattle and less than 0.6% of cattle holders had insurance. The numbers illustrate the tremendous growth needed to cover Indian farmers against livestock risks adequately.

 

Types of Cattle Insurance

There are two sorts of risks that are insured generally by major Insurance companies:

1. Death of cattle: It covers loss of life if there is an accident or injury and disease occurred due to any infection
2. Permanent Disability cover: It covers the danger of irreversible and complete disability

What Cattle Insurance Covers?

Besides death or disability caused by fire, road accidents, drowning, electrocution, snake bites, or poisoning, cattle insurance offers coverage for other issues also. They include Death due to natural calamities like famine and floods.  Death due to disease, infection, or calving during a surgical procedure. Permanent disability, for milch cows this refers to incapacity to conceive and yield milk. For bulls, this refers to incapacity to breed

How Cattle Insurance Functions?

Cattle insurance is a crucial aspect of livestock management in-country. The below steps mention how an insurance company works before insuring the farmer’s animal.

• I) the First step is to spot the cattle and determine the worth of the cattle before finalizing the sum assured. This assessment is jointly administered by the beneficiary and an authorized veterinary doctor
• ii) Beneficiary must pay the premium amount on a monthly or yearly basis, consistent with the policy

iii) In case of death or disability of the cattle, the beneficiary immediately informs the insurance agency about the incident

• iv) All the specified documents that were mentioned in the policy form has been submitted to the insurance firm
• v) Insurance firm representative will validate all the documents and settle the claim

Eligibility Criteria: Cattle policy covers people that have:

• i) Cows, bullocks or buffaloes of either sex
• ii) Cross-breed and exotic cattle owned by private owners, military dairy farms, co-operative dairies, and company dairies

iii) Both schemed and non-schemed animals fall into this policy Schemed animals.

Documents Required for Claim Process:

Following are the documents which should be submitted to the agency for Claiming the amount:

• i) Proposal form
• ii) Medical certificate from veterinary doctor

iii) Minimum 4 photographs of the insured animal

• iv) Duly filled in form
• v) Receipt of payment while purchasing the animal
• vi) Identification tag of the insured cattle Claim Process

Steps followed by Agencies are to process cattle insurance claims: 

• i) The owner should immediately intimate the insurer about the death/injury on the 24*7 toll-free customer care number of the provider
• ii) Get the death certificate or the certificate of disability from a veterinary doctor

iii) The beneficiary should also submit the duly filled claim form along with the death/disability certificate

• iv) An authorized member from the insurance firm will visit the location and verify the submitted details
• v) If the claim is found to be genuine, the amount is sanctioned and is paid to the beneficiary, else it’s rejected

Exclusions:

Though the cattle insurance aims to help Indian Farmers who have cattle, the claim is non-payable under the subsequent circumstances.

A number of these cases of exclusions are;

• Theft or illegal sale
• Shipment via airways or sea
• Terrorism, war, radioactivity and nuclear explosions
• Neglect, over-loading and treatment under unskilled doctors
• Using for other purpose than what has been mentioned within the claim proposal
• Not treating when sick or not taking any initiative treat the cattle.

And Slaughtering without permission from the veterinary or government official Time Taken to Settle Claims According to IRDA regulation, a cattle insurance must be settled by the insurer within 30 days of claim submission. If further investigation is required, the bank can take a maximum of six months to settle the claim. Companies offering Cattle Insurance in India

Some of the leading companies offering Insurance plan in India are: 

• HDFC Ergo
• Reliance General
• ICICI Lombard
• TATA AIG
• Oriental Insurance
• SBI General

Important Aspects:  

Also referred to as livestock insurance, under this policy all cattle owners are eligible. However, before buying insurance, the following things should be kept in mind:

• i) Cattle must be properly vaccinated and fed with nutritious food. If intentional carelessness is found because of which death or disability has occurred, the claim might get rejected
• ii) To process the claim approval, the bank must be intimated immediately after the mishap

iii) Authorised veterinary doctor should be engaged to treat the cattle; so that claim is not rejected.

Advantages of taking Cattle Insurance:

Cattle insurance intends to protect a maximum number of farmers in rural India against any untimely death of cattle or diseases. The policy provides coverage against the risks of death and permanent disability due to

• Famines
• Accidents
• Earthquakes
• Riots or strikes
• Surgical operations
• Fire, explosion, implosion and lightning

In Conclusion, a rural farmer whose livelihood is dependent on Income from Cattle should consider taking Insurance for cattle as this will protect the farmer against unforeseen future losses due to untimely death or permanent disability of cattle.

In India, where 65% population stays in the rural areas, the number of farmers and ranchers is huge and most of them own cattle or livestock that becomes an important commodity in their life. Often they encounter unforeseen unfortunate incidents regarding their livestock that poses a serious financial burden upon their shoulder. In this scenario, Cattle Insurance becomes a messiah for them, protecting them from such financial loss.

Even if the farmers or ranchers always try to protect their cattle by vaccinating them, providing them the best treatment, offering hygienic conditions of stabling but still after that, sometimes they cannot escape the unfortunate death or disablements or accidents of their cattle. Cattle insurance here offers financial help protecting from such loss. So if your cattle are your livelihood, you must be protected adequately by cattle insurance.

What are the key Features/Benefits of Cattle Insurance?

There are multiple benefits that you can avail of under this insurance policy. Let’s look at its key features below.

• Coverage for indigenous animals – This policy offers financial protection for different herd animals such as milch cows, milch buffaloes, stud bulls, bullocks, calves, sheep, and goats, and so on.
• Accidental coverage – If your cattle face any accident and you have to face some financial loss due to that, the insurer takes care of your expenses.
• Death coverage – If your livestock meets death due to accidents, unpredictable incidents, or by diseases, surgical operations, this policy takes care of the financial loss. The terms and conditions of this animal mortality coverage may vary from company to company.
• Disability coverage – In case of permanent total disablement of your cattle, you can claim reimbursement for your financial expenses.
• Protection to your herd – If you are a herd owner, this insurance policy offers you insurance for a specific number of cattle. For example, for 200 dairy cows or for 300 pigs.
• Protection against falling prices – If you are a livestock producer and seller and if the market value of the cattle falls below a specific amount, this insurance policy protects you from that financial loss.
• Security to your cattle – This policy provides financial security in case of strike, riot, civil commotion risk.
• Safeguard from liability – As the cattle are unpredictable, this policy saves you against claims of damage against you or your property.
• Protection to your assets – This Cattle Insurance is very policy that not only saves you from a huge financial burden but also it provides strong protection to your assets, the cattle.
• Adjustable according to your convenience – Usually, the numbers of cattle increase in the season of birth and can decrease at any time due to different reasons. So, in a way, if the number of cattle fluctuates throughout the year, the policy can be adjusted according to that and so the premium amount. In this case, your insurance agent can help you out in determining the coverage protection based on changes in herd value during that financial year.

Eligibility Criteria of Cattle Insurance

Cattle insurance policy is specially designed for those people who have

• Cows, bullocks, or buffaloes of either sex.
• High-valued and cross-breed cattle are owned by private owners, military dairy farms, cooperative dairies, and corporate dairies.
• This policy covers both schemed and non-schemed animals. Schemed animals are those cattle that are subsidized under National Livestock Development Board (NLDB) and State Livestock Development Board (SLDB).

It has to be kept in mind that at the time of buying this cattle insurance policy, the cattle should be in sound health, must not be injured, and must not be suffering from any disease. The policy seeker must get a certificate of the health condition of the cattle from a registered veterinary practitioner.

Non-scheme animals refer to all types of cattle owned by / belonging to an individual or corporate, dairy farms, cooperative/ corporate dairy funded by various financial institutions, etc. Animals under the following age groups are eligible for the cattle insurance policy.

Animal Type	Animal Age
Milch Cows	2 years/ or age at 1st calving – 10 years
Milch Buffaloes	3 years/ or age at 1st calving – 12 years
Stud Bulls	3 years – 8 years
Bullocks and male Buffaloes	3 years – 12 years
Female Calves or Heifers	From the age of 4 months – 2 years or 1st calving age whichever is lower
Milch Cow’s offspring	From the age of 4 months – 2 years or 1st calving age whichever is lower
Milch buffaloes’ offspring	Up to 3 years or 1st calving age, whichever is lower

What Are The Different types of Cattle Insurance?

There are different types of Cattle Insurance that are available with the various insurance companies in India. Let’s find out the types and their details in brief below.

Hog and Pig Insurance

Most of the insurance companies that offer cattle insurance, usually also cover pigs, hogs, and swine raised in a restricted area. These packages cover specific causes of death only that may vary from insurer to insurer. For example, you may opt for the protections against barn fires, specific weather events, accidental drowning, falling objects, and so on.

Sheep and Goat Insurance

Usually, all the companies that provide Cattle Insurance, cover sheep and goats too. Generally, this provides financial security against death or total permanent disability due to accidents, weather events, and some more but it usually excludes the death by sickness or disease. If you own any precious or high-valued sheep or goats and if you want to insure in individually, it would be advisable to go for a specialized animal mortality insurance policy.

Chicken Insurance and Other Coverage for Poultry

The poultry insurance policy usually comes under a Cattle Insurance policy that is specially designed to safeguard you and your poultry business from the risks that your business may encounter. Whether you deal with chickens, turkeys, or even emus, there is an insurance option that can protect your investment.

The general standard policy covers the expenses raised due to physical damage to your assets. Usually, sickness and diseases are not covered under this policy but some companies provide extensions or additional benefits to strengthen the financial security such as loss of income due to interruption of egg production, loss of income due to loss of meat birds, and some more.

What is Covered Under Cattle Insurance?

The Cattle Insurance policy covers a number of death causes and it may be divided into two kinds of coverage: Comprehensive or “Full Mortality” Coverage and Limited Coverage. The general inclusions under this insurance policy are as follows.

• Natural accidents – If your cattle meet a death due to natural calamities like flood, famine, earthquake, etc. the financial loss will be compensated by the insurer.

• Unpredictable circumstances – If your cattle face any mortal injury due to any unforeseen accident such as drowning, shooting, loading and unloading, falling objects, fire, smoke, electrocution, explosions, and so on, a cattle insurance policy takes care of those expenses.
• Diseases – You can also avail of financial protection if your cattle suffer from some diseases. But the type of disease may vary from company to company.
• Surgical Operations – If your cattle need any surgical operation, that medical expenses are also covered by the insurer under this policy.
• Terrorist Act – This policy also covers the financial loss due to terrorist activities on certain grounds.
• Strike, Riot, and Civil Commotion risk – The cattle insurance policy covers the financial loss raised due to crimes, civil unrest like theft, vandalism, and some more.
• Animal Attacks – If your livestock faces any mortal injury due to animal attacks, this insurance policy will cover that financial loss too.
• Collision or other death while transporting – This policy also covers the expenses if your cattle face death due to collision or other death while transporting, on certain grounds.

What Are The General Exclusions of Cattle Insurance?

The general exclusions of the cattle insurance policy are as follows.

• Malicious damage, and if death occurs due to willful injury or neglect, overloading, unskillful treatment, or animal’s use (without Company’s consent) for purposes beyond the policy’s guidelines.
• If an accident occurs and/or disease is contracted prior to commencement of risk.

• If damages happen due to war, invasion, an act of a foreign enemy, nuclear exposure, secret sales, or a missing case of an insured animal.
• Theft of the insured animal.
• Intentional killing, however, killing under legal and/or veterinarian’s supervision is an exception.
• Animal’s demise within 15 days of policy’s inception.
• ‘No tag-No claim’ provision is applicable to the policy.
• If any damages happen during air or sea transport and transit beyond certain kilometres mentioned in the Policy Wordings.

Names of The Various Companies That Provide Cattle Insurance

There are a different number of companies that provide Cattle Insurance policy and they are as follows.

• SBI General Insurance
• Reliance General Insurance
• Future Generali Total Insurance Solutions
• TATA AIG Insurance
• HDFC Ergo
• The Oriental Insurance Company Limited.

How Can I Claim Under Cattle Insurance?

Follow the below-mentioned steps to avail a hassle-free, easy claim settlement process for this insurance policy.

• The owner should intimidate the insurer or the agent of the company immediately after the death or injury of the insured cattle, at least within 24 hours.
• Keep with you the death certificate or the disability certificate from a legal veterinary doctor.
• The beneficiary must submit the duly filled claim form along with the required documents.
• A surveyor will be appointed on behalf of the company to visit the site, investigate and verify the submitted details.
• Remember, whether your claim will be rejected or approved depends on the report of the surveyor. So, cooperate with him and with the company.
• Keep all the necessary documents prepared and do not provide any false information.
• If your claim is found to be genuine, it will be approved and the beneficiary will receive the amount, or else it will be rejected.

Documents That Are Required For The Claim Settlement Process

The required documents for the smooth and successful claim settlement process are as follow.

• Proposal Form
• Medical Certificate from registered Veterinary doctor
• Minimum 4 Photographs of the insured animals of postcard size or soft copy, to be provided by the proposer where the applied tag can be clearly identified.
• Duly filled claim form
• Receipt of payment while purchasing the animal
• The identification tag of the insured animal
• DD/Cheque along with the above-given documents

 Frequently Asked Questions

Most frequent questions and answers about Cattle Insurance FAQs

 

• How is the sum assured calculated under this policy?

At first, the cattle will be identified and then it will be insured for its current market price. The market price of the animal to be insured will be determined and agreed upon jointly by the policy seeker and the authorized veterinary practitioner.

• Do I need to vaccinate my cattle before buying this policy?

Yes, you need to vaccinate your cattle and they must be fed with nutritious food. They must be in sound health before buying this policy. For that, you also need a medical certificate from a registered veterinary practitioner.

• What is the premium amount for the insurance?

The premium amount totally depends upon the insurance company, their terms, and conditions, and the cattle. So, the amount may vary from insurer to insurer.

• What is the policy period for the cattle insurance policy?

The minimum policy period is of 1 year and the maximum can be of 3 years.

• Can the cattle insurance policy be transferred to the new owner?

Yes, it can be transferred as this insurance is valid on the sale of the cattle.

 

• Does this policy cover the expenses of the removal of the dead bodies of the cattle?

This facility is not available with all the companies. However, some companies have this additional benefit, where they will bear the expenses of removing the animal carcass if it dies in a covered loss.

• Can I cancel my policy?

Yes, you may cancel your policy by sending 15 days’ notice in writing by Regd. A.D. to you and at your last known address. To know in detail, refer to your Policy Wordings.

 Regulations in India permit mobile transactions only if linked to a registered bank account. While this protects clients, it does exclude the approximately 50% of Indian adults who do not have access to a bank. Most of these people live in low-income rural areas. In Africa, micro-payment services that work without a bank account have been a major success in serving the rural poor. These technology platforms can be used not only for transactions but also offer new ways to bring livestock microinsurance to the poor in a cost-effective way, especially if bundled with knowledge and services. Paravets or veterinary doctors in the field could also offer micro-insurance policies provided the set-up is right. Training field staff to apply Radio-Frequency Identification (RFID) chips to animals would be one example. To enable farmers to afford the policies, administration cost must below. Deploying today’s communication inventions in a new way, as already happens in Africa, is one solution that comes to mind. Finally, yet importantly, farmers need access to additional services. These should include vaccination of animals, advice on best farming practices and access to markets and weather information so they can plan and develop their business. Such services must make their way into the country side. Here insurers can play an important role by sharing know-how they gained not only in India but also around the globe. Innovations in Africa on payments, claims and farmer-relevant information can act as a model here. Raising the level of livestock regulation while livestock plays an important part in nearly every rural household, it does not have the same importance on the regulatory level yet. The livestock sector receives only about 12% of total public expenditure on agriculture and allied sectors, and only about 4–5% of total institutional credit. It must become an integral part of the public support framework similar to that used to promote the farming of crops. Over 50% of farm-level credit for livestock production comes from traditional lenders. Cash credit and micro credit is virtually unheard of in livestock. A majority of livestock farmers do not even have the facility of Kisan Credit cards. This instrument aims to provide need-based and timely credit support to farmers for their cultivation needs as well as for their non-farm activities in a cost effective manner. Transforming insurance in a changing market Experience in other areas showed that financial institutions are prepared to go rural if the regulatory environment is right. Insurers ventured into the country side when regulation under the micro insurance quota system required it. In turn, this development encouraged financing institutions to hedge their own risk whil lending to the poor. Although this was a great start, there was one setback: the micro-insurance quota system tended to respond primarily to the needs of rural lending banks rather than needs of customers. Regulatory and process reform in livestock should concentrate on farmers needs. Using the agricultural reforms for non-livestock farming as a blueprint is a good starting point. Infrastructure investments around livestock are also needed. These should include: · The government addressing, on a national level, the incidence of disease, the vulnerability to new exotic diseases and the shortage of feed and fodder should disease arise. · An overall strategy to strengthen animal health (prevention/control of disease), including the establishment of disease-free zones, the management of grazing lands, projects and policies to rejuvenate pastures and encouraging the dairy cooperatives to extend veterinary services to farmers. · The government must invest and focus on providing veterinary infrastructure, vaccines, artificial insemination breeding farms and fodder to farmers. Needed, too, are easy and safe animal identification tags ‒ for example based on Radio Frequency Identification (RFID).Since RFID tagging enables storage of information such as an animal’s breed, health status and value at inception, the insurer immediately knows exactly which animal is affected when a claim is submitted. This would considerably expedite the claims process. · Ensuring adequate infrastructure for safeguarding bio-security, proper quarantine services and a system to prevent the spread of disease across state and national borders. · Generating a reliable, timely and open-access database on livestock, production numbers, disease and weather risks to help the industry plan and prepare for incidents as well as future growth. · Making institutional credit available and accessible to small farmers. This policy should also include support for the formation of self-help groups to facilitate the provision of livestock credits. · Last but not least, farmers must be supported in literacy and general education as well as with livestock specific management instruction. Insuring livestock farmers in India has significant potential because now their needs remain largely uncovered. Farming is an open-roof business depending on the effective risk management of weather and other risks such as disease. Currently, most farmers in India run these risks on their own – often with the devastating consequence that they quit farming for good once disaster strikes.

 Kumar vipul,BDO ,Future Generali Total Insurance Solutions