RULES & REGULATIONS FOR INSURANCE OF COMMERCIAL BROILERS & LAYERS POULTRY IN INDIA
Inspite of all precautions, accidents do occur. Earth quakes, floods and cyclones occur frequently causing loss of lives and damage to property. Hence, it is necessary to adopt more effective techniques or devices or methods to deal with the problem ‘risk’ in modern society. Insurance is one of the important methods to deal with risk where by it is transferred to an insurer.
Poultry farming is a volatile business in India, in which there is usually a possibility of huge profits as well as losses. In the event of death of poultry, the farmer suffers loss of income and disruption in the rearing program. If the loss exceeds a specified limit, then poultry insurance compensates the farmers so that the farmer can control the loss completely. Poultry insurance acts as a risk transfer mechanism in exchange for a small premium. The Poultry Insurance Scheme is applicable to all types of exotic and cross-breed poultry birds in India with poultry farms. At the time of death, 80% compensation of the value of the bird is given according to the pricing table and 20% additional compensation is given for Gumboro disease according to the conditions.
Inherent Risk
Human life and material possessions are continuously exposed to loss or damage by numerous destructive forces. There is a great deal of uncertainty in life, commerce and industry. Risk is inherent and uncertainty is a fundamental fact of life. Human beings have a strong desire for security of their lives and possessions. This desire for security is to be satisfied by taking all precautions possible to avoid or prevent the consequences of risk.
Insurance Concept
Insurance is a concept which provides for collection of small amounts of premium from many individuals and firms out of which losses suffered by a few are reimbursed.
Insurance in India
References to insurance are found in “Manu Dharma Shastra” (Code of Manu). Earliest transactions of insurance are traced to the beginning of the fourteenth century in Northern Italy. However, insurance was established in India only at the beginning of the 19 th century.
In 1972, the General Insurance Business ( Nationalisation) Act, 1972 was passed. Under the provisions of this Act, the General Insurance Corporation of India was established by the Government with effect from 01.01.1973. All the 107 insurance companies were merged with one or the other of the four subsidiaries of the General Insurance Corporation there after. The four subsidiary companies are :
The Oriental Insurance Company Limited
New India Assurance Company Limited
National Insurance Company Limited
United India Insurance Company Limited
In tune with the social objective of the Government soon after Nationalisation, all the insurance companies have developed packages which cater to the needs of rural India. In this process, insurance of cattle, sheep, dog, poultry Honeybee, Sericulture and other livestock is facilitated. Financial institutions have taken a policy decision that all livestock and poultry units financed by them are to be insured.
Insurance industry is opened to private players as per IRDA Act 2000 and as on today more than 100 private players have started Poultry insurance business in India.
Poultry farming belongs to the important appliances in agricultural sector in rural India. It has gained acceptance among the people of all regions in India. Unfortunately, many risk and uncertainties, including lack of biosecurities (Sims (2007)), are involved in agricultural manufacturing like poultry farming. Risk is generally considered as the potential deviation between expected and real revenue. Poultry farmers generally enjoy limited predictability of risks and uncertainties. Therefore they are expected to avert those risks and uncertainties to the insurance providers through payment of some pre-assigned premium (Akintunde (2015)). The enhanced willingness to transfer risk and uncertainties to the insurance providers has the ability to encourage greater investment in poultry production (Mahul and Stutley (2010)). But realities do not always stand for favoring insurance as an option for risk sharing (Chand et al. (2016)). Enrolling into an insurance policy is a tedious task. It involves cost in terms of insurance premium while benefit is uncertain (or at least unobservable). Low or unsustainable income among poultry farmers has an adverse effect on choosing insurance as a risk sharing tool. The unsatisfactory claim settlement regarding loss compensations also plays a retarding role to motivate poultry farmers for choosing insurance as an avenue of risk sharing. There are diverse feelings towards agricultural insurance by poultry farmers.Low level of participation of poultry farmers in buying insurance premium is very much common in developing nations (Mahul and Stutley (2010), Ajieh (2010)).
- Scope and Features of the Scheme
‘Poultry’ refers to poultry units consisting of chicks/hens/cocks, Ducks, Turkeys, Quails and such other domesticated birds reared for eggs and/or meat. It includes (a) layer birds (b) broilers (c) hatchery birds (Breeding Stock). For the insurance purpose, Exotic bird means that whose parents are of foreign breed either born in the country or abroad. A crossbred bird means one, of whose parents, is of foreign breed.
- Applicability
(a) All birds in the farm should be covered.
(b) The Scheme is applicable to poultry farms which consist of minimum number of
(i) Layer birds (ii) Broilers per batch iii) Breeding birds in Hatchery
III. Age
Layer birds – 1 day old to 72 weeks
Broilers – 1 day old to 8 weeks
Hatchery Birds – 1 day old to 72 weeks
- Premium rates
Rates shall be fixed per bird for each of the following groups according to market conditions, mortaility experience and veterinary service promptness.
(i) Layer birds
1 day old to 20 weeks
20 weeks to 72 weeks
(ii) Broilers
1 day old to 8 weeks per batch or per annum
(iii) Hatchery
1 day old to 72 weeks
(Extra premium to be charged for every additional increase than the maximum value fixed for the bird.)
- Sum Insured per bird
The market value of birds varies from breed to breed, from area to area and from time to time. Guideline valuation chart should be mapped out to be approved and attached for fixing the maximum sum insured per bird and to be the base of settling claims afterwards either for the Layers, for the Broilers or for the Hatchery Birds.
- Insurance Coverage
The policy shall provide indemnity against the death of birds due to the accident (including Fire, Lightning, Flood, Cyclone, Famine, Strike and Riot) or diseases contracted or occurring during the period of insurance, subject to the following exclusions:
- Malicious/ wilful injury, neglect.
- Transit by any mode of transport.
- Improper management (including overcrowding)
- Undergrowth, cannibalism, the actions of predators like preying birds and carnivorous animals
- Theft and clandestine sale of birds.
- Intentional slaughter of the birds except in cases where destruction is necessary to terminate incurable suffering on humane consideration on the basis of certificate issued by a qualified veterinary surgeon or in cases where destruction is resorted to by order of lawfully constituted authority.
- A consequential loss however caused.
- Permanent and partial disablement of any nature.
- Loss of production
- Loss due to: (a) Fowl Pox, Infectious Bronchitis and other specifically named diseases. These diseases are covered by the policy only if the birds are successfully inoculated against these diseases, if preventive and curative measures are taken from time to time, and if the necessary veterinary certificates to that effect are supplied to the Company. (b) Malnutrition (c) Undergrowth (d) Cannibalism (e) Loss due to huddling and/or piling of birds. (f) Avian leucosis complex (A.L.C.)
- Salmonellas covered subject to submission of a clean certificate from competent. Authorities immediately after testing.
- War, invasion, the act of foreign enemy, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection mutiny, tumult, military or usurped power or any consequences thereof or attempt thereat.
- Any accident, loss, destruction, damage or, legal liability directly or indirectly caused by or contributed to or by or arising from nuclear weapons.
VII. Veterinary Examination
(a) A Veterinary Certificate from a qualified Veterinarian showing the following details is necessary for acceptance of risk:
- Type of Birds
- Age of Birds
- Details regarding housing, light, ventilation, temperature, insulation, floor, feeds, water, sanitation etc.
- Vaccination and inoculation particulars.
- Debeaking
- Condition of health
- Type and source of feed
- Details of equipment
- Details of management/staff
- Veterinary assistance
- Mortality rate with reasons for the last 2 or 3 years
(b) The Insurer reserves the right to maintain his own check and depute.
VIII. Identification
All the birds would be covered on a flock basis. No identification is necessary. Insured must maintain at their own cost lot-wise records to show inter alia (a) Mortality (b) Culling (c) Feed consumption (d) Incidence of diseases (e) Vaccination and medication (f) Purchases and sales (g) Daily Stock Register.
- Important Policy conditions
- The poultry farm should have a veterinary facility.
- The cages if used must be maintained properly.
- Proper housekeeping.
- In the event of an outbreak, all healthy birds should be segregated and all precautions should be taken to arrest the spreading of the disease, under advice to the Insurance Company immediately.
- Proper balanced standard feed and clean water should be supplied to birds.
- Proper flock record should be maintained on a day to day basis.
- Transfer of interest/ ownership is not allowed.
- In case of death/ outbreak of epidemic immediate notice within twelve hours should ‘be given to Company. All birds ‘should be segregated and produced to the representative of the Company or to any person authorized by the Company.
- Debeaking and deworming should be carried out regularly and record to that effect should be maintained.
- Blanket Policies
Blanket policies would be issued, subject to the weekly declaration in favour of clients who maintain regular records of each unit/ lot by which group of birds could be identified and in which all illness suffered, treatment provided and vaccinations carried out are recorded in the normal course of business. Additional premium at an agreed rate will be charged on pro-rata basis on receipt of declarations for the new stock, subject to Veterinarian’s Certificate.
- Procedure for claims settlement
(a) Admissibility of the claim: Claim under the policy would be admissible only if the mortality in the Flock exceeds the limits given below: (for example) Weeks Mortality
- Broilers: 1 day old to 8 weeks 5% of the population in each lot.
- Layers: 1day old to 8 weeks 5% of the population in each lot 9 weeks to 72 weeks 3% of the population in each lot Compensation towards loss of the birds will be made only for the death of birds exceeding the mortality percentage given above.
(b) Liability of the Company: The Insured will be indemnified for 100% of the value of the bird at the time of death as per the valuation table is given as guidelines.
XII. Claim procedure
In the event of a death of birds, immediate intimation should be given to the Company and the Insurer should be supplied with the following documents and required information:
- Duly completed claim form
- Death Certificate from a Veterinarian.
- Post mortem report if required by the Company.
XIII. Salvage
No salvage will be deducted from claim.
XIV. Housing and Equipments
A separate fire policy may be considered to grant cover for housing and equipments.
Insured amount = Number of birds x Market price per bird based on maturity
Responsibility of farmers
1) According to the vaccination programs get the whole chickens vaccinated against common and prevalent diseases.
2) Maintain good poultry management practices.
3) Maintain daily production records.
4) Comply with the rules as per local legal requirements.
Insurance claim process
1) Post mortem report should be prepared by a qualified veterinary officer and a certified veterinary surgeon within 24 hours after death.
2) Report the death and loss incident to the insurance company in 12 hours.
3) Submit claim documents to the insurance company within 14 days of the loss, including insurance policy papers, duly claimed papers, post mortem reports.
Insurance Coverage:
The policy shall provide indemnity against death of birds due to accident (including fire, lighting, flood, cyclone, strike, riot and civil commotion and terrorism) or diseases contracted or occurring during the period of insurance subject to the following exclusions
- Malicious/willful injury.
- Transit by any mode of transit.
- Improper management (including over crowding)
- Undergrowth, cannibalism, action of predators like preying birds and carnivorous animals.
- Theft and clandestine sale of birds.
Intentional slaughter of the birds except in cases where destruction is necessary to terminate incurable suffering on humane consideration and to protect the remaining healthy flocks to reduce additional losses on the basis of certificate issued by qualified Veterinary Surgeon or in cases where destruction by order of lawfully constituted authority under intimation to Insurance Company.
Consequential loss however caused.
Permanent and partial disablement of any nature.
Loss of production.
Marek’s disease, Ranikhet disease, fowl pox and infectious bronchitis. These diseases are covered by the policy if the birds are successfully inoculated against these diseases and the necessary veterinary certificate to that effect is supplied to the company. Coccidiosis and other diseases are covered only if preventive and curative measures are taken from time to time. The farm should be closed for shortage of water, death due to starvation because of non supply of feed to farm due to any reason whatsoever.
Under growth
Cannibalism
Loss due to huddling and/or piling of birds
Avian Leucosis Complex (ALC)
War, invasion, act of foreign enemy, hostilities (whether war be declared or not) civil war, rebellion, revolution, insurrection, mutiny, tumult, military or usurped power or any consequences thereof or attempt thereat.
Any accidental loss, destruction, damage or legal liability directly or indirectly caused or contributed to by or arising from nuclear weapons.
2 months if epidemic disease occurs.
Malnutrition
Veterinary Examination
A Veterinary Certificate from a qualified veterinarian or the consultant veterinarian of the insured is necessary.
In case of layer farms having more than 5000 birds inspection of the farm should be preferably done by Company’s Veterinary Officer.
Veterinary health examination fees should be borne by the insurer
The insurer reserves the right to check periodically and depute for the purpose thereof any representative.
Veterinary report should in all cases be sent to company and should not be handed over to the propose.
IMPORTANT UNDERWRITING CONDITIONS
- Poultry farm should have veterinary facility of its own or on consultancy.
- Proper balanced standard feed, water and light should be supplied to birds.
- Debeaking and deworming should be carried out regularly and record to that effect has to be maintained.
- The minimum number of birds, prescribed have to be maintained and all the birds should be covered on flock basis thus no identification is necessary.
- Proposer must keep all the essential records as mentioned below at the farm
Flock record on day to day basis – daily stock register
Mortality Record
Culling Register
Vaccination and inoculation particulars
Feed consumption
Production record
Debeaking
Incidence of diseases
Purchases and sales
- Answers to al the questions in the proposal form and health certificate should be properly answered without any blank.
- Any change of birds should be informed immediately to the concerned office and new birds being added into the batch should pass through the Veterinarian Examination.
- Transfer of interest/ownerships is not allowed.
- The cages used must be of normal standard dimensions and maintained properly.
- All birds in the farm/shed should be insured.
Procedure for Claim Settlement
Admissibility of the claim
Claim under the policy would be admissible only if the mortality in the flock exceeds beyond the excess limit given below
- Liability of the company – the insured will be indemnified for 80 % of the value of the bird at the time of death as per the valuation table.
For claims out of Gumboro disease, additional excess @ 20 % would be applied.
Claims Procedure
In the event of death of birds, immediate intimation should be given to the company and the insurer should be supplied with the following documents and required information.
- Duly filled claim form
- Post Mortem Report
- Daily records of mortality, feeding etc.
- Purchase invoices for the birds
- Any other proof to substantiate the loss like photographs, medical bills etc. as and when required.
In the case of alarming death, out-break of epidemic nature, immediate notice with in 12 hours should be given to the company and all birds should be segregated and produced to the representative of the company or to any person authorized by the company for inspection.
Daily mortality details should be sent to the company on weekly basis failing which report will be treated as NIL for that particular week.
Delay in reporting of the claim should be avoided and if there is delay for more than three days, the claim would be treated as non – standard.
Salvage
During the outbreak of epidemic, natural calamities in the farm, insured should arrange emergency sale of live in the presence of the representative of the insurance company in order to avert or minimise the loss. In case the insured realises the values less than the valuation table agreed upon for the corresponding week, then the difference will be paid to the insured as per terms and conditions of the policy.
Various Standard Forms
Proposal form
Veterinary certificate for acceptance of risk (Fitness Certificate)
Claim Form
Veterinary Certificate to be submitted during claims :
Death Certificate and Post Mortem Report
DETERMINANTS OF POULTRY INSURANCE
Insurance is a complicated service which in some situation may act as necessary good while in other situations it may be looked as a luxury good (Rees and Wambach (2008)). Insurance companies generally guided by risk aversion and charge high premium from high risk poultry farms. High premium rate may result low demand for insurance. Therefore the ‘risk’ of the poultry farm to meet adversities plays the proximate role in shaping insurance decision of poultry owners. Now the ‘risk’ of poultry farming has various dimensions. First of all, the unpredictability of demand for poultry products may potentially put a threat of low profit, even loss (Chatterjee and Rajkumar (2015)). The market of poultry products strongly faces substitutability from other livestock farming. Presence of low priced livestock products put a strong impediment to the profitability of poultry farming. Natural calamities, coupled with low profitability, may widen the ‘risk’ of poultry farming (FICCI (2018)). Second, poultry owners’ management power to combat adversities associated with economic social and cultural aspects may vary due to lack of proper training or education. Therefore another major source of ‘risk’ emerges from inadequate level of education of poultry owners (Adeyonu, Oyawoye, Otunaiya, and Akinlade, (2016)). Most of the poultry farms are managed by unprofessional business men who have alternative source of income. Third, poultry farming in rural west Bengal is not an industry, rather it’s a type of agriculture (Sethi (2007) and Dana (1998)). Although poultry farming is not subsistence farming, it is not completely commercialized. Backyard poultry farming is considered as a practicable alternative for rural poor to overcome the problem of disguised unemployment (Sarap (2017)). This intended us to consider family size as a matter of ‘inspiring’ factor of insurance decision of the poultry framers. If poultry farms are running through modern entrepreneurial practice, family size would not have any effect on the risk and profitability of poultry farms. Therefore dependence of insurance decision on family size may be considered as an index of entrepreneurisation of poultry farming. Fourth, poultry farmers like all productive and commercial activities, hunt for profit. High market share and a sizeable amount of revenue may induce the poultry farmers to expand current business. To protect high precariousness in profitability in poultry business, the poultry farmer may opt for insurance. But in other strand, high precariousness in profitability may discourage the insurers to supply insurance products among poultry farmers. Even, for high risk poultry farms, the insurers may charge prohibitive premiums. Therefore profitability bears a mixed responsibility in inducing purchase of insurance plans among poultry farmers. This justifies the inclusion of ‘revenue’ as a proximate determinant of insurance decision among poultry farmers. Fifth, dearth of capital is a common phenomenon in almost all underdeveloped countries. Shortage of capital among poultry farmers in rural Bengal is an extreme reality (Mehta and Nambiar (2007). Expansion of banking sector in rural areas is growing and supply of loanable funds is increasing in recent years. Commercial add-on of poultry farming influenced poultry farmers to opt for business loans from commercial banks. Repayment of such loan requires high profitability and longer survival of the poultry farming industry. Poultry farmers may opt for insurance for high profitability and longer survival of the poultry farming industry (Mehta and Nambiar (2007), NABARD (2018)). It is expected that high amount of loan as well as high value of fixed capital may compel the poultry farmer to be insured. Sixth, age may be looked as a proxy of experience (Miller (2001), Jeong, Kim and Manovskii (2008)). The theory of learning by doing emphasizes ‘experience’ as a factor of production (Chang, Gomes and Schorfheide (2002)). Highly experienced labour is associated with a higher level of productivity. Productive units generally distinguish between ‘novice’ and ‘experienced’ workers in terms of pay packet (Kurugscu (2006)). But there is no ready reference to measure experience quantitatively. Age appears to be as a proxy measurement of experience. Age is expected to appear as a sound factor in determining insurance decision of poultry farmers (Oyinbo, Abdulmalik and Sami (2012)). Mishra and Godwin (2006), Oyinbo et al. (2012) and Farayola et al. (2013) found significant impact of age of the poultry farmers upon the insurance dicission. Our study has included ‘age’ as an influencing factor of insurance decision of poultry farming. Seventh, good health can serve better than challenging health in the labour market. Government healthcare facility is generally associated with low cost and therefore quality of healthcare is compromised (Lewis (2006)). Poultry farmers using government health facility is highly likely to suffer from ill health in comparison to the private healthcare users (Chakraborty, Gatti, Klugman and Gray-Molina (2002)). Therefore those poultry farmers are highly prone to purchase insurance plan for their poultry units. Eighth, educating all children is an important precedence among modern families. Private schools are growing while public schools are suffering from declining enrolment (Kingdon (2017)). This is due to the fact that demand of ‘quality’ primary education is sharply increasing. Inability to respond with this enhanced demand by public education system paved the way of increasing private schools. Education expenditure in private school is much higher than the education expenditure in public schools. Therefore temptation of admitting children into private schools may put financial burden upon parents. High insecurity in terms of children’s educational expenditure may induce poultry farmers to opt for insurance. Lastly, employment in subsidiary (moonlighting) job lowers the income insecurity (Kisumano (2017), Adhikary and Pal (2012)). Therefore poultry farmers, who are engaged in other subsidiary activities, may not choose insurance for poultry farming. Therefore multiple employments in various economic activities may discourage poultry farmers to be insured. Keeping in view all these ‘qualifications’, this paper aims to uncover factors affecting insurance decision of poultry framers. To complete the empirical flight, we have estimated a binary logit model where the dependent variable is whether the poultry farm is insured or not. The decision to insure the poultry unit is considered to depend upon a set of independent variables comprising family size, level of education, age of the poultry farmer, monthly average revenue from poultry farming, amount of outstanding loan, whether the poultry farmers are using the public healthcare system or not, and the market value of fixed capital engaged in poultry farming.
IRDAI GUIDELINES FOR INSURANCE OF COMMERCIAL BROILERS & LAYERS POULTRY IN INDIA
Poultry Insurance of future generali india
BAJAJ ALLIANZ POULTRY INSURANCE POLICY
ROYAL SUNDARAM GENERAL INSURANCE CO. LIMITED POULTRY INSURANCE
UNDERWRITING AND CLAIMS CONSIDERATIONS FOR POULTRY INSURANCE
Compiled & Shared by- Team, LITD (Livestock Institute of Training & Development)
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Reference-On Request.
