May 28: The agriculture and livestock insurance programme initiated by the government a decade ago to attract farmers to agriculture and animal husbandry is mired in controversy.

The insurance companies have stopped issuing insurance policies under this scheme since May 21 after the government failed to release funds to the companies in this regard.

The interest shown by people in agriculture and animal husbandry since the last few years might wither away if the insurance scheme is stopped.

Since banks do not invest in agriculture without insurance, the development of the agricultural sector will be hindered as well.

The program came to a halt following a dispute between the insurance companies and the Ministry of Agriculture and Livestock Development (MOALD), which had been backing the insurance policies for various crops and livestock. However, the government is yet to officially announce the closure of the program.

Ashok Khadka, general secretary of Nepal Insurers’ Association (NIA) and chief executive officer of Neco Insurance Limited, said that 16 companies that issue such insurance have already stopped issuing the policies.

 “NIA issued a statement on May 15 and decided to suspend all insurance work from May 21 if they did not receive the subsidy amount for agriculture and livestock insurance from the government,” said Khadka. He claimed that the 'ego' of the employees of the MOALD compelled them to stop the insurance program.

The government had launched the Agriculture and Livestock Insurance on January 14, 2013 with the aim of attracting the youth towards agriculture and animal husbandry. Two years ago, the government increased the subsidy to 80 percent from the initial subsidy of 50 percent. After the government decided to bear 80 percent of the insurance premium, the interest of farmers across the country towards agriculture and livestock insurance increased.

According to the latest data of the Nepal Insurance Authority, up to 150,000 insurance policies are being issued annually. Punam Gyawali, deputy director and head of the agriculture insurance branch of the authority said that 143,711 insurance policies cover damages worth Rs 41.17 billion were issued from July to April of the current fiscal year. The insurance premium for the policies is Rs 1.86 billion.

There is a provision for the government to bear 80 percent of the cost and provide subsidy to the insurance companies. Accordingly, the government should provide subsidies of Rs 1.48 billion to the insurance companies.

The government initially instructed the insurance companies to implement the program. As the number of insurers increases, it is seen that disputes are increasing. Now, the MOALD has stopped payments to insurance companies, claiming that there were many mistakes in the insurance policies issued for agriculture and livestock. According to the insurance companies, the government is yet to release Rs 2.94 billion as the subsidy to the insurance companies for agriculture and livestock insurance scheme.

Government officials on the other hand claimed that there are discrepancies in the records maintained by the insurance companies.

If agricultural technicians make the wrong assessment, the Ministry of Agriculture has the right to take action against them, insists government officials.

 Punam Gyawali of MOALD says that the insurance documents issued by the insurance companies show plenty of human errors.

She said, “When an insurance policy is issued, the insurance fee should be Rs 100,000, but it was found to be as high as Rs 1 million because an extra zero was added by the companies.”

Agriculture officials claim that there were errors in many insurance documents.