CATTLE INSURANCE

Submitted byAkshaya Kumar (141633)

Divya Mishra
Amey Saraf

(141640)
(141660)

Yogesh Sharma (141663)

Surya Singh

(141669)

Amit Sunkarwar (141674)

Mayank Verma

(141683)

CATTLE INSURANCE

Cattle-

Animals indigenous, exotic or cross bred within the age limit as indicated-

Milch cows

2 years to 10 years

Milch Buffaloes

3 years to 12 years

Stud bulls (cows/buffaloes

species)

3 years to 8 years

Bullocks(castrated bulls n
male buffaloes)

3 years to 12 years

The cattle insurance Scheme has been formulated with the twin objective of providing protection mechanism to the farmers and cattle owners against any
eventual loss of their animals due to death.
demonstrate the benefit of the insurance of livestock to the people and popularize it
with the ultimate goal of attaining qualitative improvement in livestock and their
products.

IMPORTANT ASPECTS OF CATTLE INSURANCE

Sum insured and premium- It varies from cattle to cattle and is based on
market value of the cattle.
Discount- Group discount is only available on a slab to no. of animals like 510, 11-15 and so on.
Insurance coverage- Insurance policy covers only for death due to

accident ( inclusive of any natural calamity)

diseases contracted or occurring during the period of the policy.

surgical operations

Riots and strike

The policy could be extended to cover PTD ( Permanent Total Disability)

on payment of extra premium.

CONTINUED

Exclusions to policy

Malicious or wilful injury or neglect, overloading, unskilful treatment or use of

animal for purpose other than stated in policy.
Accident/disease occurring prior to commencement of risk.
Intentional slaughter of the animal.
Theft and secret sale of the animal
Transport by air and sea

Special conditionsIC not liable to pay if death of animal is due to disease occurring within 15 days
from the commencement of risk.
Claim is not entertained unless the ear tags are surrendered to the company.

HOW CATTLE INSURANCE POLICY IS

SOLD

Micro Finance Institutes

Banc assurance Model

Co-Operative Society Model

BANC ASSURANCE MODEL

ISSUES RELATED TO THIS MODEL:

In case of borrower not able to pay off the

loan, he becomes apathetic towards the
cattle and he may not take appropriate care
of the cattle.
Claim intimation is done by the banks.
Since bank acts as intermediary, any
ignorance on the part of bank employee may
lead to miscommunication between insured
and insurer. This may arise a problem in
claim settlement.

CO-OPERATIVE SOCIETY MODEL

ISSUES RELATED TO THIS MODEL:

Insurers issue the policy as group policy.

They need to examine each and every cattle
carefully. This task is tedious so there are
greater chances of mistake being
committed in underwriting.

ISSUES FACED BY INSURERS

No awareness among rural population regarding the cattle

insurance policy.
Cost of hiring independent veterinarian is too high
In event of market value of cattle dropping below the sum
insured, chances of moral hazard significantly increases.
Livestock Development Board has no proper system of maintaining
subsidy data and customer details so this leaves loopholes in their
condition of providing subsidy to only two cattle.
Foremost problem in any general insurance business is that
customer tends to be careless towards insured product after
insurance.

Public Insurers have significantly high claim ratio. This makes

livestock insurance loss incurring. IRDA has specified that minimum
5% of the total underwritten premium is to be collected from this
segment so Public insurers have no option but to remain in market
while making losses.
Actuarial data is absent so insurers have no basis to charge the
proper premium. They charge premium equal to 4%-7% to the sum
insured .
Customers do not tend to disclose the health history of insured
cattle.
Agents
In most of the villages, there is no proper infrastructure for the
cattle
Insurers and customers do not take any measure to reduce the risks

In case of absence of photo tagging in public insurers, ear tag can be

removed and attached to the other dead animal with similar
birthmark. This is the greatest risk for public insurers.
In rural market, there is high cost associated with making an entry to
it. That is the reason why most of the insurers avoid coming into the
livestock insurance sector. Out of 21 general insurers, only 7-8 offer
the livestock insurance policy.
During epidemic disease, claim ratio becomes sky-rocketing high and
insurer suffers heavy loss.
Most of the branches of insurers are in urban area while livestock
insurance sector is mostly confined to the rural area.

ISSUES FACED BY CUSTOMERS

Customers do not have choice of choosing insurer themselves. They

tend to issue policy via either Banc-assurance or Co-operative dairy
model. In both models, Insurer companies having tie-up with Bank/Cooperative dairy insurers the cattle. Customer doesnt have choice of
choosing insurer.
As suggested earlier, they do not have theft coverage. Theft is also
major risk in cattle insurance business along with the death and
permanent disability. However, insurers do not provide cover for the
theft. This makes policy cover narrower and leaves a lot to be desired.
Ear-tags provided are fragile. It breaks within few months.
Sometimes during the year, cattles market value goes higher than
the insured value. In such circumstances, customer tends to suffer
loss in event of death of the cattle because the claim amount he
receives will be lesser than the market value of the cattle.
Customers have to rely entirely on the third party for the insurance.
Instead, Insurer should facilitate the communication directly with the
customer so that customers get first hand insurer directly from the
horses mouth.

SUGGESTIONS

Lacks innovations and cover can be extended with

increased premiums.

Tracking device can be installed

Photo identification and non removable ear tags.

Radio- frequency identification

Spreading Awareness.

analysis of past data to avoid losses.

CONTD..

Risk reduction measures

Subsidy record should be maintained to avoid unfair means.

Promoting policies to those who have taken agricultural

insurance.

To avoid adverse selection premiums should be according to

risk.

Regular health check-ups to ensure good health of cattle

Indian Economy is based on agriculture.

Target should farmers.

11crore people are dependent on cattle for

their primary or secondary income.

Brokers and Agents avoid this policy, due to which awareness is very
less.
Brokers should appoint head of the villages as temporary marketing
officer /agent for awareness, as people rely and trust them.

Advertisement.
Insurance company should tie up with co-operative dairies
and fertilizer distributor.

INSURANCE
COMPANY

FERTILIZER
DISTRIBUTOR
AND
CO-OPERATIVE
DAIRIES

Insurance Company should offer comprehensive cover.

THANK
YOU