LIVESTOCK INSURANCE

Overviews of Cattle Insurance in India

December 19, 2023

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Overviews of Cattle Insurance in India

Cattle insurance protects Indian rural people from financial loss incurred due to the death of their cattle. The cost of cattle is high and their loss can force farmers to get into a debt cycle. With cattle insurance, farmers will get comprehensive protection against the cattle loss.

In India, where 65% population stays in the rural areas, the number of farmers and ranchers is huge and most of them own cattle or livestock that becomes an important commodity in their life. Often they encounter unforeseen unfortunate incidents regarding their livestock that poses a serious financial burden upon their shoulder. In this scenario, Cattle Insurance becomes a messiah for them, protecting them from such financial loss.

Livestock contribute towards the livelihood of the poor by supporting subsistence consumption at household level, providing with complementary cropping activities, buffering against seasonality in income from other income generation activities and providing some assets for insurance against un predictable demands for cash (Dorward et al. 2009). Livestock is an integral part of the livelihood of India’s rural population. It contributes significantly to the overall output of the country’s agricultural industry. Farming in India depends to a large degree on the vagaries of monsoon. If the rains fail, crops wither. Livestock plays a crucial role in mitigating that risk. It provides alternative employment – especially for women and income opportunities. As the critical mechanism to cope with crop failure, it helps generate assets and bolsters the financial security of rural Indian farmers, many of whom are among the poorest people in the country. During the last two decades, population growth, aberrant monsoon due to climate change, restrictions on land use, deforestation, cash crop plantation by big farmers, decreased land availability, sharp rise in land prices and industrialisation promoted through globalisation forced the farmers to shift to intensive farming system from the traditional free-range system (Bala Ravi2004). The intensive rearing of livestock led to higher incidences of diseases and involvement of high feed cost due to stallfed system. Decrease in green and dry fodder availability from village common land and nearby forest areas with increased incidences of foot and mouth disease (FMD), pleuropneumonia, Peste des petits ruminants (PPR), avian influenza and anthrax enhanced the risk in commercial livestock production activities resulting in decline in native livestock population (FARD2007). Fischer and Buchenrieder, 2009 established the fact that the absence of livestock insurance threatened the long-term livelihood of small farmers by increasing the vulnerability to acute financial loss in the mountainous regions of Northern Vietnam. A comprehensive study by Perry and Grace, 2009 highlighted the complex relationships among ‘livestock, livestock disease, livestock disease control and global poverty’ and concluded that livestock diseases affected poverty reduction. This signifies the introduction of sophisticated risk management mechanisms for sustainable livelihood of farmers in the above scenario. Lack of proper animal husbandry extension support with veterinary healthcare services and risk minimisation options such as livestock insurance limited the livelihood options of farm households adversely affecting dietary diversity, food security and income generation. Limited availability of organic manure from the decreasing livestock population, use of dry cattle dung as fuel for cooking due to diminishing availability of firewood, non-affordability for use of alternate sources of energy as fuel for domestic purposes, high cost and scarcity of inorganic fertilizers, threatened sustainable agriculture and soil health status in most of livestock farming areas of country.

Even if the farmers or ranchers always try to protect their cattle by vaccinating them, providing them the best treatment, offering hygienic conditions of stabling but still after that, sometimes they cannot escape the unfortunate death or disablements or accidents of their cattle. Cattle insurance here offers financial help protecting from such loss. So if your cattle are your livelihood, you must be protected adequately by cattle insurance. The Government of India provides insurance against income losses of vulnerable sections arising out of four major reasons (i) yield losses in agriculture (crop insurance),(ii) death and disability of an earning member of a family (life insurance and group accident insurance schemes), (iii) unforeseen health expenditure (e.g. health insurance)and (iv) death of cattle, buffaloes and sheep (e.g. livestock and sheep insurance). This section provides an overview of the basic nature, premium rates and compensation structure of livestock schemes.

What are the key Features/Benefits of Cattle Insurance?

There are multiple benefits that you can avail of under this insurance policy. Let’s look at its key features below.

Coverage for indigenous animals – This policy offers financial protection for different herd animals such as milch cows, milch buffaloes, stud bulls, bullocks, calves, sheep, and goats, and so on.
Accidental coverage – If your cattle face any accident and you have to face some financial loss due to that, the insurer takes care of your expenses.
Death coverage – If your livestock meets death due to accidents, unpredictable incidents, or by diseases, surgical operations, this policy takes care of the financial loss. The terms and conditions of this animal mortality coverage may vary from company to company.
Disability coverage – In case of permanent total disablement of your cattle, you can claim reimbursement for your financial expenses.
Protection to your herd – If you are a herd owner, this insurance policy offers you insurance for a specific number of cattle. For example, for 200 dairy cows or for 300 pigs.
Protection against falling prices – If you are a livestock producer and seller and if the market value of the cattle falls below a specific amount, this insurance policy protects you from that financial loss.
Security to your cattle – This policy provides financial security in case of strike, riot, civil commotion risk.
Safeguard from liability – As the cattle are unpredictable, this policy saves you against claims of damage against you or your property.
Protection to your assets – This Cattle Insurance is very policy that not only saves you from a huge financial burden but also it provides strong protection to your assets, the cattle.
Adjustable according to your convenience – Usually, the numbers of cattle increase in the season of birth and can decrease at any time due to different reasons. So, in a way, if the number of cattle fluctuates throughout the year, the policy can be adjusted according to that and so the premium amount. In this case, your insurance agent can help you out in determining the coverage protection based on changes in herd value during that financial year.

Why Livestock Insurance?

Raising cattle, sheep or poultry is a risky business – especially if you do not own a herd or flock but only one or a few animals. The biggest risk is disease. This can decrease the production of meat or milk and, in the worst case, result in the death of the animals. If there is only one animal on the farm, as is often the case in India, this is a huge exposure. Diseases trigger cost. The direct cost incurred is in the treatment of the animal. Additionally, there is the loss-of profit if the animal products can no longer be offered for sale, or the cost associated with buying products the owner normally procures from his animals. A wider cost can be a loss of market share should buyers switch to other providers. Finally, but just as important, buying new animals costs money. Shouldering this cost as well is very burdensome for many farmers. Another set of risks has to do with as shortage of fodder. The monsoon determines how much is available in the country. If the rains fail, supplies drop at a time when farmers are most in need. At the same time, falling production due to underfed animals makes it more challenging to secure the revenues necessary to cover rising prices in the fodder market. In breeding farms, there is also the risk that the production of higher yielding animals is not successful. India still has plenty of room to increase animal productivity by switching to better breeds of animals. If these new breeds underperform, this is a risk to the breeders These risks become even more serious if the sector grows and changes. The growing number of urbanites in India will mean city dwellers becoming increasingly dependent on accessing animal products from the countryside. To meet this demand many smallholders in India will, over time, need to develop into commercial farmers, and sell the surplus they make to the growing cities. Transforming subsistence farming into an agricultural enterprise also means that farmers will become more aware of the risks they face because livestock failure will be tantamount to business failure. To protect their revenues, the coming decades will see them looking increasingly to insurance as a means to deal with business risks. Average annual losses calculated due to diseases like Foot & mouth diseases 74.3%, Haemorrhagicsepticaemia 19.2%, Black quarter 5.2 % and Anthrax 1.3 % in cattle during 1991-2005 time periods. Insurance as the key risk transfer must adapt to the coming reality of more commercial farming in India. A simple look at the numbers reveals how big this challenge is. In 2012, 41.8 – 62.7 million cattle could have been insured. In2009, less than 7% of the cattle and less than 0.6% of cattle holders had insurance. The numbers illustrate the tremendous growth needed to cover Indian farmers against livestock risks adequately.

Cattle are considered one of the most valued possessions of the rural community. Marginal, small and medium farmers earn considerable portion of their income from cattle rearing. Since the livelihood of farmers depend so much on them, it becomes important to get cattle insurance for comprehensive coverage against cattle loss. Cattle insurance is another endeavour of the Government of India to protect the agro-based economy of the country.

What is Cattle Insurance?

Types of Cattle Insurance

There are two types of risks which are insured under this policy:

Death of cattle: It covers loss of life due to accident or injury and disease occurred due to surgical infection

Permanent Disability cover: It covers the risk of permanent and complete disability

What Cattle Insurance Covers?

Besides death or disability caused by fire, road accidents, drowning, electrocution, snake bites or poisoning, cattle insurance offers coverage for other issues as well. They include:

Death due to natural calamities like storms and earthquakes
Death due to disease, infection or calving during surgical operations
Permanent disability, for milch cows this refers to incapacity to conceive and yield milk. For bulls, this refers to incapacity to breed

How Cattle Insurance Functions?

Cattle insurance is an important aspect for livestock management in rural area. Let us understand how this insurance works.

First step is to identify the cattle and determine the price of the cattle before finalizsng the sum assured. This assessment is jointly carried out by the beneficiary and an authorised veterinary doctor
Beneficiary needs to pay the premium amount on monthly or yearly basis, according to the policy
In case of death or disability of the cattle, the beneficiary immediately informs the bank about the mishap
All the required documents need to be submitted to the insurance company
Insurance company representative will validate all the documents and settle the claim

Eligibility Criteria

Cattle Insurance Policy covers people who have:

Cows, bullocks or buffaloes of either sex
Cross-breed and exotic cattle owned by private owners, military dairy farms, co- operative dairies and corporate dairies
Both schemed and non-schemed animals fall under this policy Schemed animals refer to cattle subsidised under National Livestock Development Board (NLDB) and State Livestock Development Board (SLDB)

The policy seekers need to ensure that at the time of buying insurance, the cattle should not be injured or suffering from some disease. The health condition needs to be certified by a veterinary surgeon. Animals under the following age group are eligible for the insurance cover.

Animal Type	Animal Age
Milch Cows	2 yrs/or age at 1^st calving – 10 yrs
Milch Buffaloes	3 yrs/or age at 1^st calving – 12 yrs
Stud Bulls	3 yrs – 8 yrs
Bullocks & Male Buffaloes	3 yrs – 12 yrs
Female Calves/ Heifers	From age of 4 months – 2 yrs/ 1^st calving age, whichever is lower
Milch Cow’s offspring	From age of 4 months – 2 yrs/ 1^st calving age, whichever is lower
Milch Buffaloes offspring	Up to 3 yrs/1^st calving age, whichever is lower

Documents Required for Claim Process

Following are the documents which should be submitted to get the claim amount:

Proposal form
Medical certificate from veterinary doctor
Minimum 4 photographs of the insured animal
Duly filled in claim form
Receipt of payment while purchasing the animal
Identification tag of the insured cattle

Claim Process

Following steps are followed to process cattle insurance claims:

The owner should immediately intimate the insurer about the death/injury on the 24*7 toll free customer care number of the provider
Get the death certificate or the certificate of disability from a veterinary practitioner
The beneficiary should also submit the duly filled in claim form along with the death/disability certificate
An authorised member from the insurance company will visit the site and verify the submitted details
If the claim is found to be genuine, the amount is paid to the beneficiary, else it is rejected

Exclusions

Though the cattle insurance aims to cover most of the rural Indians who have cattle, the claim is non-payable under the following circumstances. Some of these cases of exclusions are:

Theft or clandestine sale
Shipment via airways or sea
Terrorism, war, radioactivity and nuclear explosions
Neglect, over-loading and treatment under unskilled doctors
Using for other purpose than what has been mentioned in the claim proposal
Not treating when sick or not taking any initiative to prevent the death
Accidents or injury which occurred before the commencement of the policy
Slaughtering without permission from the veterinary or government official

Time Taken to Settle Claims

According to IRDA regulation, a cattle insurance needs to be settled by the insurer within 30 days of claim submission. If further investigation is needed, the bank can take maximum six months to settle the claim.

Companies offering Cattle Insurance in India

Some of the insurance companies offering this plan in India are:

HDFC Ergo
Reliance General
ICICI Lombard
TATA AIG
Oriental Insurance
SBI General

Important Aspects

Also known as livestock insurance, this policy is available for almost all cattle owners of rural India. However, before buying an insurance, the below mentioned facts must be kept in mind:

Cattle must be properly vaccinated and fed with nutritious food. If intentional carelessness is found as the cause of death or disability, the claim might get rejected
To get the claim approval, the bank must be intimated immediately after the mishap
Skilled and certified veterinary doctor should be engaged to treat the cattle; else the claim might get rejected

Advantages of Buying Cattle Insurance

Cattle insurance intends to benefit maximum number of people in rural India. The insurance policy provides coverage against the risks of death and permanent disability due to

Famines
Accidents
Earthquakes
Riots or strikes
Surgical operations
Fire, explosion, implosion and lightning
Aircraft damage or missile testing activities
Disease contracted and infection which was inflicted during the policy period
Natural calamities like storms, tornado, typhoons, hurricane, inundation and floods.

Eligibility Criteria of Cattle Insurance

Cattle insurance policy is specially designed for those people who have

Cows, bullocks, or buffaloes of either sex.
High-valued and cross-breed cattle are owned by private owners, military dairy farms, cooperative dairies, and corporate dairies.
This policy covers both schemed and non-schemed animals. Schemed animals are those cattle that are subsidized under National Livestock Development Board (NLDB) and State Livestock Development Board (SLDB).

It has to be kept in mind that at the time of buying this cattle insurance policy, the cattle should be in sound health, must not be injured, and must not be suffering from any disease. The policy seeker must get a certificate of the health condition of the cattle from a registered veterinary practitioner.

Non-scheme animals refer to all types of cattle owned by / belonging to an individual or corporate, dairy farms, cooperative/ corporate dairy funded by various financial institutions, etc. Animals under the following age groups are eligible for the cattle insurance policy.

Animal Type	Animal Age
Milch Cows	2 years/ or age at 1^st calving – 10 years
Milch Buffaloes	3 years/ or age at 1^st calving – 12 years
Stud Bulls	3 years – 8 years
Bullocks and male Buffaloes	3 years – 12 years
Female Calves or Heifers	From the age of 4 months – 2 years or 1^st calving age whichever is lower
Milch Cow’s offspring	From the age of 4 months – 2 years or 1^st calving age whichever is lower
Milch buffaloes’ offspring	Up to 3 years or 1^st calving age, whichever is lower

What Are The Different types of Cattle Insurance?

There are different types of Cattle Insurance that are available with the various insurance companies in India. Let’s find out the types and their details in brief below.

Hog and Pig Insurance

Most of the insurance companies that offer cattle insurance, usually also cover pigs, hogs, and swine raised in a restricted area. These packages cover specific causes of death only that may vary from insurer to insurer. For example, you may opt for the protections against barn fires, specific weather events, accidental drowning, falling objects, and so on.

Sheep and Goat Insurance

Usually, all the companies that provide Cattle Insurance, cover sheep and goats too. Generally, this provides financial security against death or total permanent disability due to accidents, weather events, and some more but it usually excludes the death by sickness or disease. If you own any precious or high-valued sheep or goats and if you want to insure in individually, it would be advisable to go for a specialized animal mortality insurance policy.

Chicken Insurance and Other Coverage for Poultry

The poultry insurance policy usually comes under a Cattle Insurance policy that is specially designed to safeguard you and your poultry business from the risks that your business may encounter. Whether you deal with chickens, turkeys, or even emus, there is an insurance option that can protect your investment.

The general standard policy covers the expenses raised due to physical damage to your assets. Usually, sickness and diseases are not covered under this policy but some companies provide extensions or additional benefits to strengthen the financial security such as loss of income due to interruption of egg production, loss of income due to loss of meat birds, and some more.

NB-

No interest rate has been fixed for Cattle Insurance. The premium rates of Cattle Insurance has been fixed by the Government, primarily based on the stakeholder consultation with the Insurance companies operating in Government Sector involved in Livestock Insurance and the State Governments. The past claim experience is the major criteria that has been taken into consideration.

The Livestock Insurance scheme has got good acceptability across India. Feedback reports from various States indicate that premium rates are affordable to the farmers belonging to different categories.

The Government has not digitized the overall Cattle Insurance procedures because of the reason that the central share is released to the State Governments depending on their demand and availability of funds. After providing matching shares by the States, they are utilizing the total amount for livestock insurance for the desired number of cattle. The details of animals being insured are updated in the INAPH portal.

This information was given by Union Minister for Fisheries, Animal Husbandry & Dairying, Shri Parshottam Rupala in a written reply in Rajya Sabha today.

What is Covered Under Cattle Insurance?

The Cattle Insurance policy covers a number of death causes and it may be divided into two kinds of coverage: Comprehensive or “Full Mortality” Coverage and Limited Coverage. The general inclusions under this insurance policy are as follows.

Natural accidents – If your cattle meet a death due to natural calamities like flood, famine, earthquake, etc. the financial loss will be compensated by the insurer.

Unpredictable circumstances – If your cattle face any mortal injury due to any unforeseen accident such as drowning, shooting, loading and unloading, falling objects, fire, smoke, electrocution, explosions, and so on, a cattle insurance policy takes care of those expenses.
Diseases – You can also avail of financial protection if your cattle suffer from some diseases. But the type of disease may vary from company to company.
Surgical Operations – If your cattle need any surgical operation, that medical expenses are also covered by the insurer under this policy.
Terrorist Act – This policy also covers the financial loss due to terrorist activities on certain grounds.
Strike, Riot, and Civil Commotion risk – The cattle insurance policy covers the financial loss raised due to crimes, civil unrest like theft, vandalism, and some more.
Animal Attacks – If your livestock faces any mortal injury due to animal attacks, this insurance policy will cover that financial loss too.
Collision or other death while transporting – This policy also covers the expenses if your cattle face death due to collision or other death while transporting, on certain grounds.

What Are The General Exclusions of Cattle Insurance?

The general exclusions of the cattle insurance policy are as follows.

Malicious damage, and if death occurs due to willful injury or neglect, overloading, unskillful treatment, or animal’s use (without Company’s consent) for purposes beyond the policy’s guidelines.
If an accident occurs and/or disease is contracted prior to commencement of risk.

If damages happen due to war, invasion, an act of a foreign enemy, nuclear exposure, secret sales, or a missing case of an insured animal.
Theft of the insured animal.
Intentional killing, however, killing under legal and/or veterinarian’s supervision is an exception.
Animal’s demise within 15 days of policy’s inception.
‘No tag-No claim’ provision is applicable to the policy.
If any damages happen during air or sea transport and transit beyond certain kilometres mentioned in the Policy Wordings.

Names of The Various Companies That Provide Cattle Insurance

There are a different number of companies that provide Cattle Insurance policy and they are as follows.

SBI General Insurance
Reliance General Insurance
Future Generali Total Insurance Solutions
TATA AIG Insurance
HDFC Ergo
The Oriental Insurance Company Limited.

How Can I Claim Under Cattle Insurance?

Follow the below-mentioned steps to avail a hassle-free, easy claim settlement process for this insurance policy.

The owner should intimidate the insurer or the agent of the company immediately after the death or injury of the insured cattle, at least within 24 hours.
Keep with you the death certificate or the disability certificate from a legal veterinary doctor.
The beneficiary must submit the duly filled claim form along with the required documents.
A surveyor will be appointed on behalf of the company to visit the site, investigate and verify the submitted details.
Remember, whether your claim will be rejected or approved depends on the report of the surveyor. So, cooperate with him and with the company.
Keep all the necessary documents prepared and do not provide any false information.
If your claim is found to be genuine, it will be approved and the beneficiary will receive the amount, or else it will be rejected.

Documents That Are Required For The Claim Settlement Process

The required documents for the smooth and successful claim settlement process are as follow.

Proposal Form
Medical Certificate from registered Veterinary doctor
Minimum 4 Photographs of the insured animals of postcard size or soft copy, to be provided by the proposer where the applied tag can be clearly identified.
Duly filled claim form
Receipt of payment while purchasing the animal
The identification tag of the insured animal
DD/Cheque along with the above-given documents

FAQs (Frequently Asked Questions)

Most frequent questions and answers about Cattle Insurance FAQs

How is the sum assured calculated under this policy?

At first, the cattle will be identified and then it will be insured for its current market price. The market price of the animal to be insured will be determined and agreed upon jointly by the policy seeker and the authorized veterinary practitioner.

Do I need to vaccinate my cattle before buying this policy?

Yes, you need to vaccinate your cattle and they must be fed with nutritious food. They must be in sound health before buying this policy. For that, you also need a medical certificate from a registered veterinary practitioner.

What is the premium amount for the insurance?

The premium amount totally depends upon the insurance company, their terms, and conditions, and the cattle. So, the amount may vary from insurer to insurer.

What is the policy period for the cattle insurance policy?

The minimum policy period is of 1 year and the maximum can be of 3 years.

Can the cattle insurance policy be transferred to the new owner?

Yes, it can be transferred as this insurance is valid on the sale of the cattle.

Does this policy cover the expenses of the removal of the dead bodies of the cattle?

This facility is not available with all the companies. However, some companies have this additional benefit, where they will bear the expenses of removing the animal carcass if it dies in a covered loss.

Can I cancel my policy?

Yes, you may cancel your policy by sending 15 days’ notice in writing by Regd. A.D. to you and at your last known address. To know in detail, refer to your Policy Wordings.

As a country with the world’s large stand still expanding population, this is a dangerous development. As in other parts of the globe, ever-growing numbers of people are moving to the cities. The country needs a thriving farming sector to assure its food security. One key component of this is that farmers remain viable and working should a disaster hit their business. Insurance is normal for farmers in the developed world. Today it is possible to bring this “normal” to less developed regions as well. Once in place, insurance protection gives economic peace of mind to lenders and other value chain partners. Their agency is needed if the industry is to develop. However, they will only participate provided they know that farmers will still be around after extreme weather events or following an epidemic. Insurance is one partner in this process, bringing insurance protection to the table as well as additional know-how. A vast knowledge foundation based on claims, risk management and products structures from across the globe is at India’s disposal. 196 million households in India are farming now and will have to farm even more in the future to feed the country. It is time to start working on helping Indian farmers to meet this challenge. In recent years, climate change has affected productivity and profitability in different sectors in several ways. Therefore, the present challenge of bringing in sustainability in animal husbandry sector justifies the adoption of risk management mechanisms. Insurance is a ‘form of adaptive capacity for the impacts of climate change’ that provides the insurance users with a better control over physical and business risks (Mills 2005). Absence of sound risk mitigation mechanisms may render the animal husbandry sector unprofitable and question the viability of the sector itself in the future. Level of education of the insurance users is a major determinant of availing insurance coverage as it enhances the responsiveness of the users to risk management by enabling them to analyse the risks precisely with ‘a possible change in risk attitudes that complement improved risk carrying capacities’(Sherricket al. 2004). Due to poor planning and complex socioeconomic conditions, the overall performance of livestock insurance has been slow and poor in India.

Compiled & Shared by- This paper is a compilation of groupwork provided by the

Team, LITD (Livestock Institute of Training & Development)

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Reference-On Request

CATTLE AND LIVESTOCK INSURANCE POLICY