The government has decided to release a portion of the agriculture insurance subsidy to insurance companies as they have halted the claim clearance. The Ministry of Agriculture and Livestock Development (MoALD) has decided to release Rs 740 million out of Rs 2.94 billion due amount to be paid to non-life insurance companies. According to MoALD officials, the remaining amount will be cleared in a phase-wise manner. A total of Rs 690 million for livestock insurance and Rs 50 million for agriculture insurance will be cleared in the first phase. Talking to the Annapurna Express, Poonam Gyawali, Chief of the Agriculture and Livestock Insurance Department of the Nepal Insurance Authority, said that the amount would be paid once the paperwork and other procedures are completed. According to her, the remaining amount will also be cleared as the government has already initiated the process for the same.

Chunky Chhetri,  President of Nepal Insurers' Association (NIA), also confirmed that the government is providing a portion of the insurance subsidy. "The government is yet to provide Rs 3 billion in agriculture insurance subsidy."

NIA, the umbrella organization of non-life insurance companies in the country, last month announced the suspension of agricultural and livestock insurance. The government has been providing an 80 percent subsidy on agricultural insurance premiums. However, the government has failed to make the payments over an extended period. NIA said the government has an outstanding amount of Rs 2.94 billion to be paid as subsidies. If the government does not fulfill this payment, the association decided to halt the sale of agricultural insurance policies and the payment of claims starting from May 21. According to NIA, there is a pending amount for fish insurance subsidies from 2077 BS (2020/2021) onwards1. Similarly, for crop insurance, a partial payment has been made from Asar (June/July) to Chaitra (March/April) of 2078 BS (2021/2022), and the remaining subsidy amount has not been disbursed. NIA also states there is a pending amount for livestock insurance subsidy from Ashar (June/July) of 2078 (2021) onwards. According to the association, they have repeatedly written to the Ministry of Agriculture and Livestock Development, Department of Agriculture, and Nepal Insurance Authority for the release of the subsidy, but it has not been received. The withholding of billions of rupees has increased financial risks for the companies involved, the association stated. In a bid to cover the damages and losses to agriculture, the government introduced the Agriculture and Livestock Insurance Program in the fiscal year 2013/2014. In the initial phase, the government provided a 50 percent subsidy on the premium of the insurance. The premium was later increased to 75 percent, and currently, it is 80 percent. Now, the farmers have to pay Rs 20 out of Rs 100 premium while insuring crops and livestock. The insurance companies will get the rest Rs 80 from the government. The statistics of the Nepal Insurance Authority show the business of agriculture insurance has increased by 417.55 percent in the first half of FY 2022/23. Insurance companies have collected Rs 1.09 billion in insurance premiums from agriculture insurance in the first six months of the current fiscal compared to Rs 211.13 million during the same period of the last fiscal. The non-life insurance companies have sold 82,746 agricultural insurance policies in the current fiscal year.