Hyderabad & Anantapur: In just 36 months from April 2001, more than half a million insurance policies in rural Andhra Pradesh lapsed as people were unable to pay their premiums. Life Insurance Corporation (LIC) data obtained by The Hindu confirm this. Even if the average annual premium was as low as Rs.2,000, it would mean policyholders lost over Rs.100 crores in this brief period. The real figure could be much higher. Most were farmers bankrupted in the ongoing agrarian crisis. Some of the years seeing the largest number of lapsed policies also saw the highest numbers of suicides by farmers.
Besides, these figures only cover policies that lapsed after the first year. Many others paid a second annual instalment before going bankrupt. Those sums could be even larger.
Agrarian crisis
Since 1991, farmers hit by the crisis in this State have lost hundreds of crores of rupees in lapsed policies. In Anantapur district alone, large numbers of farmers and agricultural workers have suffered such losses. As the agrarian crisis swept the district, tens of thousands facing bankruptcy could no longer pay the premiums on their LIC `Endowment' policies. Many paid between Rs.1,000 and Rs.2,000 for the first two years and then went broke.
For the policies to stay alive, they ought to have paid the premiums for at least three successive years. Now, the minimum value of any new insurance that they take out has climbed from Rs.20,000 to Rs.50,000 an increase of 150 per cent. So new policies are beyond the reach of most farmers, hit by repeated crop failure.
The damage has been on from 1991. In just the Cuddapah division alone, over 4.3 lakh policies have lapsed since that year. The "corresponding premium value" of these is over Rs.61 crores. The years seeing the highest "dropouts" were 2000-01 to 2002-03. In those three years, the number of lapsed policies was 66,683, 75,390, and 71,029 respectively.
In the same three years, in Anantapur, which falls in this division, there were 696, 699, and 640 officially recorded suicides. Mostly, bankrupt farmers taking their lives in despair.
Suicides & dropouts
The actual suicide numbers are believed to be higher. There is then a clear link between the deepening rural distress and the "dropouts."
The LIC can hardly be blamed for this. That distress flowed from larger economic processes and policies over which it had no control. But the question now is what the corporation can do to help its battered clients in this situation. Some officials say that if the all-Andhra Pradesh figures went back to 1991, the money lost by rural policyholders unable to keep up with payments might cross Rs.1,000 crores.
In Anantapur district alone, the money lost this way runs to crores of rupees. In just the Kadiri branch of Anantapur, the figure forfeited could be over Rs.10 crores. And this is not even one of the top three branches in the district. The affected farmers are simply unable to pay. Thus, policies meant to help people have turned against them in a period of crisis. (Courtesy: The Hindu)
