Crop Insurance Risk Models Differ Between Karnataka and Maharashtra

Maharashtra uses an 80:110 "cup and cap" model, capping insurers' liability at approximately Rs 1,540 crore before the state government assumes claims. In contrast, Karnataka utilizes full risk transfer for areas covered by the Pradhan Mantri Fasal Bima Yojana, leaving insurers fully exposed to the risks they underwrite. Maharashtra has declared drought-like conditions in 265 talukas, and its premium pool this year is around Rs 1,400 crore, down from Rs 3,400 crore last year.

The varying risk transfer models change how the cost of crop damage is shared between insurers and the government. The drought conditions in Maharashtra raise concerns about potential losses, which will be determined by yield estimates uploaded to the National Crop Insurance Portal.