EXECUTIVE SUMMARY

The importance of livestock Insurance is increasing gradually in India

before the nationalization of General Insurance. Some Insurance
companies at the private sector made efforts to introduce livestock
Insurance in the country, but due to increasing number of claims than the
premiums, this program could not be succeeded.
Under the livestock Insurance, the Insurance of cows, buffaloes, camels,
horses, dogs, etc. can be made.
Various types of livestock have been vital to agriculture throughout the
world since the beginning of human civilization. Some forms of
livestock, such as goats and sheep, can be raised in areas inhospitable to
cereal crop allowing large concentration of people to live there.
Livestock refers to domesticated animals that may be kept or raised in
pens, houses, pastures, or on farms as part of an agricultural or farming
operation, whether for commerce or private use.
Livestock constitute major sources of epidemic disease in humans; these
disease have had a significant impact on history. When an agricultural
society, that raises livestock, comes in contact with a non- agricultural
society their disease often spread to the latter(who lack any resistance),
which can have devastating consequences.
This Insurance provide cover against death of animals, like bulls,
buffaloes, cows and heifers, arising as a result of accident, disease,
parturition or pregnant condition, as the case may be the Insurance is
arranged on a sort of the excess basis, and provides for a payment of
amount in excess of a certain other amount which is known as first loss.

CHAPTER 1
INSURANCE
1.1 INTRODUCTION
Insurance may be described as a social device to reduce or
eliminate risks of loss to life and property. It is a provision which a
prudent man makes against inevitable contingencies, loss or misfortune.
Insurance is a form of risk management in which the insured
transfers the cost of potential loss to another entity in exchange for
monetary compensation known as premium.
Insurance allows individuals, businesses and other entities to
protect themselves against significant potential losses and financial
hardship at a reasonably affordable rate. We say significant because if
the potential loss is small, then it doesnt make sense to pay a premium to
protect against a $50 loss because this would not be considered a
financial hardship for most.
Insurance is appropriate when you want to protect against a
significant monetary loss. Take LifeInsurance as an example. If you are
the primary breadwinner in your home, the loss of income thatyour
family would experienced as a result of our premature death is considered
a significant loss and hardship that you should protect them against. It
would be very difficult for your family to replace your income, so the
monthly premiums ensure that if you die, your income will be replaced
by the insured amount. The same principle applies to many other forms of
Insurance. If the potential loss will have a detrimental effect on the
person or entity, Insurance makes sense.
Under the plan of Insurance, a large number of people associate
themselves by sharing risks attached to individuals. As in private life, in

business also there are dangers and risks of different kinds. The aim of all
types of Insurance is to make provisions against such dangers.
Insurance is the modern method by which men make the uncertain
certain and the unequal, equal. It is the means by which success is almost
guaranteed.
The aim of all types of Insurance is to make provision against such
dangers. The risks which can be insured against include fire, the perils of
sea (marine Insurance), death (Life Insurance) and, accidents and
burglary. Thus, collective bearing of risks is Insurance.
1.1 DEFINITIONS
The term Insurance has been defined by different experts on the subject.
The views expressed by them through various definitions can be
classified into the following three categories for the convenience of the
study:
General or Social Definitions.
Functional/ Economics/ Business Definitions.
Contractual/ Legal Definitions.
1.2 TYPES OF INSURANCE
(A) LIFE INSURANCE
Term Life Insurance
Permanent Life Insurance
(B)GENERAL INSURANCE
Fire Insurance
Marine Insurance
Accident Insurance
Livestock Insurance
1.3 CHARACTERISTICS OF INSURANCE
Sharing of risks: Insurance is a cooperative device to share
the burden of risk which may fall on happening of some

unforeseen events, such as the death of head of the family, or

on happening or marine perils or loss of by fire.
Evaluation of risk: For the purpose of ascertaining the
Insurance premium, the volume of risk is evaluated, which
forms the basis of Insurance contract.
Payment on happening of specified event: On happening
of specified event, the Insurance Company is bound to
payment to the insured. Happening of the specified event is
certain in life Insurance; but in the case of fire, marine or
accidental Insurance, it is not necessary.
Amount of payment: The amount of payment in indemnity
Insurance depends on the nature of losses occurred, subject
to maximum of the sum insured. In life Insurance, however,
a fixed amount is paid on the happening of some uncertain
event or on the maturity of the policy.
Protection against risks: Insurance provides protection
against risks involved in life, materials and property. It is a
device to avoid or reduce risks.
Spreading of risk: Insurance is a plan which spread the
risks and losses of few people among a large number of
people.
Large number of insured persons:The success of
Insurance business depends on the large number of persons
insured against similar risk. This will enable the insurer to
spread the losses of risk among large number of persons,thus
keeping the premium rate at the minimum.
A contract:Insurance is a legal contract between the insurer
and insured under which the insurer promises to compensate
the insured financially within the scope of Insurance policy,

and the insured promises to pay a fixed rate of premium to

the insurer.

1.4 FUNCTIONS OF INSURANCE

The Functions of Insurance may be categorized as below:
I.
II.
III.

Primary Functions
Secondary Functions
Other Functions

I. Primary Functions
The primary Functions of Insurance include the following:
1. Provide protection: The primary purpose of Insurance is to
provide protection against future risk, accidents and uncertainty.
Insurance cannot check the happening of the risk, but can
certainly provide for the losses of risk.
2. Collective bearing of risk:Insurance is a device to share the
financial loss of few among many others. The collective bearing
of risks is Insurance. All the insureds contribute the premiums
towards a fund and out of which the persons exposed to a
particular risk is paid.
3. Evaluation of risks: Insurance determines the probable volume
of risk by evaluating various factors that give rise to risk. Risk
is the basis for determining the premium rate also.
4. Provide certainty against risk:Insurance is a device which
helps to change from uncertainty to certainty. This may be
reason that the function of Insurance is to provide certainty.
5. Spreading risks:Insurance is the device for spreading or
distributing risks.

II. Secondary Functions

The Secondary Functions include the following:
1. Prevention of losses: Insurance cautions individuals and
businessmen to adopt suitable device to prevent unfortunate
consequences of risk by observing safely instructions;
installation of automatic sparkler or alarm systems,etc.
2. Small capital to cover larger risks:Insurance relieves the
businessmen and others from security investments, by paying
small amount of premium against larger risk and uncertainty.
There is no need for them to invest separately for security
purpose and this money can be invested in other activities.
3. Contribute towards the development of larger
enterprises:Insurance provides development opportunity to
those larger enterprises having more risks in their setting up.
Even the financial institutions may be prepared to give credit
to sick industrial units which have insured their assets
including plant and machinery.
III. OtherFunctions
There are indirect functions of Insurance which benefit the
economy indirectly. Some of such Functions are:
1. Means of saving and investment:Insurance serves as
Savings and investment. Insurance is a compulsory way of
saving and it restricts the unnecessary expenses by the
insured. For the purpose of availing income-tax exemptions
also, people invest in Insurance.
2. Source of earning Foreign exchange: Insurance is an
international business. The country can earn foreign
exchange by way of issue of marine Insurance policies.

3. Promotes exports:Insurance makes the foreign trade risk

free through different types of policies issued under marine
Insurance cover.
4. Provides Social

security:

Through

various

social

protection plans, the Insurance provides social security to

people. It not only provides security atthe time of death but
also provides assistance to the insureds at the time of
sickness, old age, maternity etc.
1.5 OBJECTIVES
To know about livestock insurance
To explore the farming practices.
To understand the insurance coverage in livestock insurance.
To understand the schemes & its benefits.
To know about the settlement claim procedure.
To know about the protection programs organized by the
insurance company.
To understand the exclusion in livestock insurance.
To know about the New India Assurance.

1.6RESEARCH METHODOLOGY
Primary Data:
I have collected the primary data on this topic from 30 respondents living
in Dombivli area. I prepared a well-structured questionnaire for the same.
On the basis of convenience, I analyzed the data and presented the data in
the form of tables and diagrams.
Secondary Data:
I have collected the secondary data from books, newspapers and the web.
Sample size:

Sample size refers to the number of respondents to be selected to

constitute a sample. Sample size should be optimum. The sample size of
the survey was conducted for 30 respondents.
1.7LIMITATIONS OF STUDY
Analysis is based from data collected from Dombivli area only.
Study is subject to limitation of time i.e. 3 months.
The data is collected only from 30 respondents.

CHAPTER 2
LIVESTOCK INSURANCE

2.1 INTRODUCTION
The importance of livestock Insurance is increasing gradually in India
before the nationalization of General Insurance. Some Insurance
9

companies at the private sector made efforts to introduce livestock

Insurancein the country, but due to increasing number of claims than the
premiums, this programe could not be succeeded.
Under the livestock Insurance, the Insurance of cows, oxes, buffaloes,
camels, horses, dogs, etc. can be made. The object of this Insurance is to
provide economic assistance to farmers in the case of death or accident of
these animals.
Livestock refers to domesticated animals that may be kept or raised in
pens, houses, pastures, or on farms as part of an agricultural or farming
operation, whether for commerce or private use.
The process of breeding, raising and caring for livestock is known as
animal husbandry and is an important component of modern agriculture.
The raising of livestock can be traced to the beginnings of human
civilization, when instead of hunting wild animals; humans began to
capture animals for breeding.
Throughout history, livestock have been considered to bea form of
wealth. Livestock are mentioned in many parts of the Bible and were
used as forms of trade and given as gifts. In many cultures, livestock have
historically been offered as animal sacrifices to atone for sin and appease
the gods.
Many forms of livestock are herbivorous mammals. Various types of
livestock are reared depending on the local conditions: climate, consumer
demand, land type, native animals, and tradition all influence the
predominant type of livestock in any given area. Given that there are over
a hundred large land-based mammals it may be surprising that so few
types are domesticated in some countries. The reason for this relative
paucity is that a lot of mammals do not meet the basic prerequisites
10

necessary for domestication, such as having a readily available food

sources that can be controlled or supplied by humans, a rapid rate of
reproduction, a moderate temperament, and a social structure that meshes
well with human invention.
In developed countries the question of the welfare of livestock animal
has resulted in animal welfare laws which specify the minimum
conditions of care, housing, and transportation. The animal rights lobby
argues the are inadequate and seek tighter controls, and in extreme cases
seeks the banning of the ownership of animals and the making the
consumption of meat, dairy and other animal products illegal. Some
Farmers have developed management techniques that they believe are
more enlightened and progressive and that they feel address most of the
concerns of lobbyists.
2.2 LIVE STOCK INSURANCE IN INDIA
The livestockInsuranceprogram was started in 2002 in the village of
Kibber, in the Spiti Valley of India's northern state of Himachal Pradesh.
(The grazing reserve had been initiated three years before, in 1999.)
About 41 of the 68 herding families participated in the livestockInsurance
program between 2003 and 2004. In all, 184 head of livestock were
covered by the Insurance program.
In 2004, the program was expanded to include three smaller
villages nearby--Gete, Tashigang, and Kee. More than 60 percent of the
families with insurable livestock in those villages have already
enrolled. Implementation of a livestock Insurance program is also
underway in the village of Chichim.

11

Eventually, it's hoped that all the families in these five villages will be
part of the program. The Trust and its local partner organizations also
hope to expand the program to other parts of northern India. Discussions
with community leaders have already begun in the Gya-Miru region, in
the Indian state of Ladakh.
The Trust has gradually been decreasing its financial support of the
livestockInsuranceprogram, as the Insurance fund has built surplus funds
year by year. By 2010, it's hoped that the program will become selfsustaining.
2.3 Origin of Livestock Insurance
Various types of livestock have been vital to agriculture throughout
the world since the beginning of human civilization. Some forms of
livestock, such as goats and sheep, can be raised in areas inhospitable to
cereal crop allowing large concentration of people to live there.
In other cases, livestock could be used to supplement unreliable or
uneconomical cereal crops. Raising livestock is less dependent on good
weather and is less labour incentives than most forms of plant agriculture.
Animals could graze on pasture unfit for human consumption.
For example, in Italy and Spain during the middle ages and early
modern period, sheep were extremely important for an economy. The
often dry weather and increasing number of crop failures during the 16th
century encouraged landlords and other investors to switch from grain
production to livestock-raising. Massive sheep migrations were regulated
by the governments, and formed a large portion of the tax base for the
economy in Spain and were vitally important in Italy. The government
established vast networks of sheep walks with sufficient pasture lands, in
order to facilitate the winter migration of herds of millions of sheep and
12

thousands of shepherds. Government officials also regulated the rotation

of shepherds on pasture to smooth their movement. These governments
would then levy duties on the products, such as wool, cheese, hides and
meat, produced from sheep moved along the road. Sheep manure was
also used as a fertilizer to augment grain harvests.
In other areas, including most of northern Europe, livestock was
usually held in smaller numbers. In these areas, higher levels of rainfall
allowed for large animal such as cows to be raised. Many cultures had
provisions for common grazing land.
2.4 Need for Cattle Insurance
Risk reduction mechanisms are working poorly
- Poorly executed vaccination and other
-

prophylactic

measures
Lack of good breeding and genetic improvement methods
Improper feeding and sheltering facilities with the farmers
Poor rural veterinary infrastructure soft as well as hard
Insurance product presently offered are limited to

catastrophic death and disability covers.

Low penetration of livestock Insurance with <10% cattle insured
due to
- Slim Covers
Livestock
YEAR
Present

Penetration
6.58%

- Problem with
Distribution
Channels
- Literacy and
awareness

2007-08

11.50%

2008-09

16.50%

2009-10

21.50%

2010-11

26.50%

2011-12

31.50%

13

Table 2.1

2.5 Farming Practices

At the most basic level some kinds of animals are kept in
enclosures of some sort, are fed by some means (given access to natural
or human-provided sources of food), are usually bred (preferred breeding
times, methods, and such like all depend on local conditions and
tradition) and are either slaughtered for meat and animal by-products, or
are milked or shorn for animal fiber.
Livestock may be kept in confirmation in very small areas (cages
or pens), as with poultry, rabbits or veal cattle , in sheds or barns, in
fenced pastures or on large open ranges where they are only occasionally
collected in round-ups or musters. Herding dogs such as sheep dogs
and cattle dogs may be used for mustering as are cowboys, musterers and
14

jackaroos on horseback or in helicopters. Since the advent of barbed wire

(in the 1870s) and electric fencing technology, fencing pastures has
become much more feasible and pasture management simplified. In some
cases very large numbers of animals may be kept in indoor or outdoor
feeding operations (on feedlots), where the animals feed is processed,
offsite or onsite, and stored onsite then fed to the animals. Because of
their size, the quantity of waste involved, fly and odour problems,
potential for groundwater contamination, animal welfare and other factors
these feedlots are highly regulated and are controversial in some areas.
Livestock may be branded, marked, or tagged to denote ownership
or for inventory, breeding, health management, product identification and
tracing, or other purpose.
Modern farming techniques mainly focus on the automation of the
various tasks involved and human intervention to increase yield and
improve animal health. Successive improvements of traditional
techniques have mostly focused on these same goals. Economics, quality
and consumer safety all play a role in how animals are raised. Drug use
and feed supplements (or even feed type) may be regulated, or prohibited,
to ensure yield is not increased at the expenses of consumer health, safety
or animal welfare.
Practices vary around the world, for example growth hormone use is
permitted in the United States but not in the European Union or in
countries selling meat/produce in the EU such as Australia and New
Zealand.
2.6 DISEASE

15

Livestock constitute major sources of epidemic disease in humans;

these diseases have had a significant impact on history. When an
agricultural society, that raises livestock, comes in contact with a nonagricultural society their disease often spread to the latter(who lack any
resistance), which can have devastating consequences.
The following tables lists disease which originally infected
livestock and can now infect humans:

Disease

Sources animal

Smallpox

Cattle

Tuberculosis

cattle

Measles

cattle

Influenza

Pigs, ducks

Pertussis

Pigs, dogs
Table 2.2
16

Other disease can be transmitted from animals. Mad cow disease is

transmitted between cattle which are fed food containing cattle brains and
spines. It is postulated that the disease vector causing mad cow diseases
can also be transmitted to humans who eat infected cattle, causing the
fatal disease known as variant creutzfeldt-Jakob disease (Cjd). Though
this connection has not been conclusively proven, over 95% of identified
cases of VCJD are in Britain, which suffered a mad cow disease epidemic
in the mid to late 1980s. Mad cow disease has led to a using cattle byproducts in cattle feed.
Other disease may be transmitted from livestock to humans include
bird flu and some may originate from the bacteria E. coli O157:H7. Also,
anthrax was called the woolsorters disease because the skin form of the
disease could be contracted from handling raw wool. Anthrax may be
contracted from cattle, sheep goats, camel and antelopes as well as
directly from infected soil.
The use of antibiotics in animals that end up in the human food
chain is controversial. The issue of antibiotic resistance has limited the
practices of preventative dosing such as antibiotic-laced feed.
Livestock are also subject to other diseases. Veterinary certificates are
often required before transporting, selling or showing animals. Disease
free areas are often rigorously enforced. Foot and mouth disease (FMD)
led to a massive government sheep and cattle in the north of England in
2001. Six million animals were killed to shop an outbreak with 2000
confirmed cases. Bison which wander out of Yellowstone National Park
are routinely shot to prevent the possible spread of brucellosis to Montana
cattle.
2.7 CATTLE INSURANCE
17

This Insurance provide cover against death of animals, like bulls,

buffaloes, cows and heifers, arising as a result of accident, disease,
parturition or pregnant condition, as the case may be the Insurance is
arranged on a sort of the excess basis, and provides for a payment of
amount in excess of a certain other amount which is known as first loss.
The policy excludes, inter alia, destruction in compliance with any staute
or order of any government or local authority, or in case of unfitness or
incapacity from fulfilling duties for which the animal is kept. Any death
arising out of castration or other surgical operation is also excluded. The
number of animals covered by cattle Insurance in India has increased
from 2-10 lakhs in 1976 to 43-72 lakhs in 1980, 160-79 lakhs in1985 and
256-22 lakhs in 1988-89.
The cattle and livestock Insurance was demanded since
independence. No worth mentioning progress was made till 1972 when
the general Insurance was nationalized. Recently some progress has made
and figure of the progress is available since 1982.Cattle and livestock
Insurance have included cattle, sheep and goat, horse/pony/mule, pig,
camel, duck, rabbit, elephant and dog.

18

Cattle Insurance schemes : The cattle Insurance policy under

market agreement covers milch cows, and buffaloes, calves / heifers, stud
bulls, bullocks and castrated male buffaloes where.
Sheep and Goat Insurance

Sheep and Goat Insurance provides indemnity to indigenous crossbred and exotic sheep and goat. Animal against death of sheep and goats
due to accident. Including Fire, lighting, Flood, cyclone, Famine,
earthquake, landslide, Strike, Riot or diseases contracted or occurring
during the period of Insurance.
This policy is available to persons having sheep and Goat of either
sex certified as being in sound and perfect health and free from injury or
disease by a veterinary doctor/ surgeon and who are Members(in groups)
of

Micro Finance

Institutions, Non-Government organizations,

Government Sponsored Organizations and such affinity groups /

institutions in rural and social sector.
Horse/pony/mule Insurance:

19

The policy for Horse/pony/mule Insurance includes draught horses half

draught horses, ponies, mules against death due to accidents and/or
specified disease contracted during the period of Insurance and subjected
to usual terms, conditions and exclusions of Insurance and subjected to
usual terms, conditions and exclusions of the policy. The age group for
such animals to be insured are 2 years to 8 years. The age group for such
animals to be insured. The sum assured is 100% market value or bank
loan which is higher. The non-scheme animals are charged premium at
the rate of 4% of sum assured where as the sachem animals are charged at
2.75% annum.

Pig Insurance:

Pig Insurance policy covers death risk due to accident or disease.

The minimum number of animals. Covered is 10 Swire fever disease is
excluded. The age group insurable is one month to 5 years. All
indigenous cross-bred and exotic pigs are insured. The maximum sum
insured per pig is Rs.500. The premium rate is 6% annum but pigs under
SFDA/IRDA scheme are charged at 3.5 % per annum. The sum assured
will be linked to 100% of market value for assured breeding farms

20

whereas in other cases it is 805 of marker value for organized breeding

farms whereas in cases it is 80 % of market value.
Camel Insurance:

The camel Insurance policy is applicable to all male and female

camel in India including camel subsidized. By SFDA/DPAP/MFAL
between ages group of 3 years to 10years. The sum assumed will be 80 %
market value or bank finance. The maximum sum insured id Rs. 3000 in
cases of bank finance SFDA/DPAP/MFAL. In case of PTD claim, 75% of
sum assured is payable. The premium rate is 4 % annum for IRDA
schemes camels and 2.25 %( net) for IRDA scheme camel. surra disease
is excluded. The minimum premium is Rs. 25 per annum per animal. The
policy provides indemnity only for death due to accident inclusive of
floor, eye lone famine or disease inclusive of Rinderpest, Blackquater,
haemorrhagic septicaemia Antrax contracted or occurring during the
period of policy or strike, riotand civil common risk. The excluclusion on
are common and specific exclusions.
Rabbit Insurance:

21

The rabbit Insurance policy is applicable to all breeds of rabbit in

India, in the age group of 1 day to 4 years, but death of rabbit due to
disease till they complete the age of 30 days is not covered. The risk
covered are, death of rabbits due to accident and / or disease contracted
during the period of Insurance. The exclusions have common exclusion
as described in camel Insurance and specific exclusions of transport by
air and sea, perm ant and specific exclusions of transport by air and sea,
permanent and partial disable intentional slaughter, undergrowth,
myxoomatosis and coocidissis. The insured is composed only 70 % of the
sum assured, the rate of premium is 7% of sum assured.
Elephant Insurance:

The elephant Insurance policy indemnifies the owner for death due
to accident or disease contracted or occurring during the period of
Insurance subject to certain exclusions stipulated. The insurable age
group is one year to 60 years. The policy is applicable to the elephants
including those owned by temple, circus companies and individuals. The
sum assured is 80% of market value. The value of sum assured does not
exceed Rs. 50,000. The premium rate is 5% per annum. The common
exclusions clause as mentioned under Cattle Market Agreement is also
applicable in this case. Specific exclusions are surgical operations,
disability, breeding and calving and certain specific diseases such as
tubereulosis, foot and mouth diseases etc.
Dog Insurance:
22

The dog Insurance policy insures the risks against due to accident and/
or disease contracted during the period of Insurance subject to usual
theory and conditions. The Insurance age group is 8 weeks to 8 years.
Dogs of indigenous cross-bred and exotic breed should not be less than
Rs. 200 and maximum value of any dog should not exceed Rs. 2,000 each
dog. The premium rate is 5% per annum. In the event of death the insures
dog, any amount received or receivable by the insured from third parties
and value of the salvage value recovered if any would be deducted from
the claim amount.etc

2.8 EXCLUSIONS
Death of the animals, arising out of the following are excluded
1 War and allied risks, strikes, riot and civil commotion;
2 Slaughter of the animal without prior consent of the insurers;
3 Fire, lighting, seagoing transit, surgical operations, breeding and loss
occasioned by the animal becoming unfit or incapable of fulfilling the
functions for which it is kept or employed.
2.9 Advantage Livestock Shield

23

This policy covers the animal against death due to disease or

accident (including fire, lightning, flood, cyclone, strike, riot and civil
commotion), contracted or occurring during the period of Insurance.
Animals that can be covered:
Cows, buffaloes, bullocks, camels, sheep, goats, horses, ponies and
mules.
Valuation & sum insured:
Identification and valuation will be as per the veterinary certificate
and or declaration of the purchase committee. Ear-tags will be supplied
by the company.
Benefit limits:
Claims will be settled for the sum insured or market value prior to
illness, whichever is less.
Premium:
Livestock Shield offers this cover at an affordable premium of 4%
per annum on the sum insured.
Uses:
Historically, livestock has provided the following benefits to
humanity.

24

 Meat:
In many agricultural societies, livestock replaced wild game as the
primary source of source of animal protein. Livestock frequent eat forage
and other food sources that humans are unable (or prefer not ) to eat and
convert them to types of food that humans can eat.
Dairy products:
Mammalian livestock can be used a source of milk, which can in
turn easily be processed into other dairy products such as yogurt,
cheese, butter, ice cream, kefir, and kumiss. In advanced dairing
countries the number of products made from milk range in the 20 to
30 types. Using livestock for this purpose can often yield several times
the food energy of slaughtering the animal outright.
Honey and Wax :
Bees collect pollen and honey from plants and process them into
products that are useful to human survival. Honey is a food and a
medicinal product (for external application and internal use) , beeswax is
still used for expensive candles.
Raw materials:
A variety of useful materials are produced by livestock. Some animal,
such as sheep, grow thick coats that can be shorn and used in textiles.
Animal, such as cows, deer and sheep have a tough skin which can be
made into leather. The bones, hoofs and horns of livestock have also been
employed in a variety of industrial, cultural and decorative uses. Most
animal offal and non-edible parts are transformed into products such as
stock-feed and fertilizer. Larvae make silk that is woven into fabric.
Fertilizer:
25

Livestock leave behind manure, which, after being spread on a field,

can increase crop yields many times. This is an important reason why
historically, plant and animal domestication have been intimately linked.
Parts of animals that have been slaughtered, or animals that die on farms,
are rendered into a variety of products, the main one being blood and
bone.
Labour :
Livestock often serves as an important source of mechanical energy.
Before the advent of steam power, livestock was often the only source of
non-human labour available. Livestock can be used to pull ploughs and
other agricultural equipment (again increasing farm yields) , transport
goods across large distances and to serve important military functions.
Draft animal are often bred for desirable qualities such as endurances,
strength and, in military usage, aggression.

Labour management:
The grazing of livestock is something used as a way to control weeds
and undergrowth on an area of land. For example goats and sheep are
used to eat dry scrub in areas prone to wild fires in order to remove
combustible material and reduce fire risk.

26

CHAPTER 3
IMPORTANT ASPECTS OF LIVESTOCK
INSURANCE.

3.1 Livestock Insurance Schemes and Benefit

27

The Livestock Insurance Scheme, a centrally sponsored scheme, is

being implemented on a pilot basis during 2005-06 and 2006-07 of the
10th Five Year Plan in 100 selected districts.
Under the scheme, the crossbred and high yielding cattle and
buffaloes are being insured at maximum of their current market price.
The premium of the Insurance is subsidized to the tune of 50%.
The entire cost of the subsidy is being borne by the Central
Government. The benefit of subsidy is being provided to a maximum of 2
animals per beneficiary for a policy of maximum of three years.
The scheme is being implemented in all states except Goa through
the State Livestock Development Boards of respective states.
The scheme will be extended in 11th Five Year Plan covering entire
country and more species of livestock depending on its performance
during the pilot period.

28

The Livestock Insurance Scheme has been formulated with the twin
objective of providing protection mechanism to the farmers and cattle
rearers against any eventual loss of their animals due to death and to
demonstrate the benefit of the Insurance of livestock to the people and
popularize it with the ultimate goal of attaining qualitative improvement
in livestock and their products.

3.3 Determination of market price of the animal

An animal will be insured for the maximum of its current market
price. The market price of the animal to be insured will be assessed
jointly by the beneficiary, authorized veterinary practitioner and the
Insurance agent.

Identification of insured animal

The animal insured will have to be properly and uniquely identified at
the time of Insurance claim. The ear tagging should, therefore, be fool
proof as far as possible. The traditional method of ear tagging or the
recent technology of fixing microchips could be used at the time of
taking the policy.
The cost of fixing the identification mark will be borne by the Insurance
companies and responsibility of its maintenance will lie on the
concerned beneficiaries. The nature and quality of tagging materials will
be mutually agreed by the beneficiaries and the Insurance Company.
3.4Change of owner during the validity period of Insurance
In case of sale of the animal or otherwise transfer of animal from one
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owner to other, before expiry of the Insurance Policy, the authority of

beneficiary for the remaining period of policy will have to be transferred
to the new owner.
The modalities for transfer of livestock policy and fees and sale deed etc.
required for transfer, should be decided while entering into contract with
the Insurance company.
III.5 Settlement of Claims
In case of claim becoming due, the payment of insured amount should be
made within 15 days positively after submission of requisite documents.
Only four documents would be required by Insurance companies for
settling the claims viz. FIR with the Insurance Company, Insurance
Policy, Claim Form and Postmortem Report. While insuring the animal,
CEOs must ensure that clear cut procedures are put in place for
settlement of claims and the required documents are listed and the same
is made available to concerned beneficiaries along with the policy
documents.
All documents/forms for insuring as well as settling the claims should be
made available by the Insurance agency in local language and English
language.

Livestock policies
Buying a livestock Insurance policy is one risk management option.
Producers should always carefully consider how a policy will work in
conjunction with their other risk management strategies to insure the best
possible outcome
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III.6

LIVESTOCK INSURANCE PROGRAMS AND

BENEFIT

The Leopard Insurance Program saves Snow Leopards

The Livestock Insurance program saves snow leopards by reducing
human-snow leopard conflicts. Wen herders are compensated financially
for occasionally losses to predators they are less likely to kill snow
leopards in retaliation.
The program is also designed to reduce conflicts by making snow
leopard predation on domestic livestock less likely in the first place. This
is done in two ways:
The program provides sustainable incentives for good herding
practices that keep domestic livestock away from snow leopards. Bonuses
are paid out of the Insurance fund to herders who have no livestock lost
during a coverage year, or to the herder who has the least losses.
In one of the participating villages, herders agree not to graze their
livestock on a portion of the villages land, leaving more forage for the
snow leopards wild prey. (The village receives a fee that is based on the
fair market rent for grazing land in the area). When wild prey is abundant
and healthy, snow leopards are less likely to turn to domestic livestock for
food.
Indeed, the population of bharal, or blue sheep, in the area has
increased three-fold since this grazing reserve was started. Bharal have
also been observed grazing in the area in the summer and autumn, their
normal pattern, rather than only in the summer, as they were before the
grazing reserve was established.

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 Livestock Insurance Program helps families

The livestock Insurance program helps families by compensating them
financially for livestock lost to snow leopards, leading to higher, more
stable household incomes. Families no longer have to fear financial ruin
as a result of snow leopard predation and have more money to meet their
basic needs.
In the region of India where the livestock Insurance program is taking
place, a herders annual income average $400-600 (US). In this area, a
yak is worth an average of $213 (US), and a horse $170(US). In other
words, loss of an animal to a snow leopard or other predator represents a
real financial hardship for herding families.
Livestock Insurance Program helps Communities
The livestock Insurance program helps communities because it is
entirely village run, an arrangement that strengthens the structure of
community.
In most of Indias Trans-Himalayan region, villages are traditionally
led by a village council, which is made up of community members
appointed on a rotating basis, and the village council.
Functions democratically to settle disputes and make other collective
decisions, has played an important role in the livestock Insurance
program from the beginning.
When the livestock Insurance program was being developed, the
council led discussions about how Insurance claims would be evaluated
and paid, and helped set compensation levels for different kinds of
livestock. The council also collects the monthly Insurance premiums from
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villagers, investigates claims when an animal is killed, and gives out

payments from the Insurance fund.
In addition, payment for the grazing reserve goes to the village
council, which uses them for development projects that benefit the entire
community.
Finally, by coming together and sharing the financial risk from
livestock predation, people contribute to the good of the village as a
whole and feel a greater sense of community.

3.6 Companies that provide Cattle Insurance

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United India
Insurance
Com pany Ltd

G eneral
Insuranc
e

Bharat AXA
G eneral
Insurance

Com paniesthat
provide Livestock
Inusrance

Livestock
Insurance
Schem e
Figure 3.1

CHAPTER 4
INSURANCE PROFILE
4.1 GENERAL INSURANCE COMPANY

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The Insurance Cooperation of India (GIC) implements various cattle l

insurance programmers. Under the livestock insurance policy, cover is
provided for the sum insured or the market value of the animal at the time
of death whichever is less. Animals are normally insured up to 100% of
their market value. The position regarding number of cattle covered,
premium collected and claims paid since 1994 95. The fall in the
number of animal insured in last two years is due to reduction in the
number of low value animals such ass calves , sheep and goats which
now constitute hardly of % of animals covered.
CATTLE INSURANCE
This is an agreement between the four subsidiaries of GIC of INDIA in
respect of Cattle Insurance business and shall be observed by all the four
companies with regards to rates, term and conditions prescribed by this
agreement.
1. Applicability
Applicable to indigenous, cross-bred and exotic cattle owned by
belonging to private owners, various financial institutions. i.e.
Bank Financed, Military dairy farms, co-operative / corporative
dairies, etc.
Cattle mean and include:

Milch cows and buffaloes

Calves /Heifers
Stud Bulls
Mithuns

2. AGE GROUP
Milch cows 2yearso or age at first calving to 10 years.
Milch buffaloes 3 years or earlier age at sexual maturity to 8 years.
Bullock /He Buffaloes 3 years to 12 years.
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Calves / Heifers 4months upto date of 1st calving.

[No relaxation in upper age limits is allowed]
Upper insurable age shall be treated as the maximum permissible
insurable age at the inception of the policy [Annual]. Kindly refer
to the Circular No. HO.RID; 08/95-96CR-4297 dated 10/04/96.
3. Valuation
Valuation based on market value as in date and place and to
be decided on the basis of recommendations of the local veterinary
surgeon .
4. Sum Insured
Not exceeding market value.

5. Transit Cover
No extra premium to be charged for transit of animal from place
to purchase to place of stabling if distance is upto 80 kms.
In case of transfer of animal during currency of policy, transit
cover can be extended to the new owner without any additional
premium in case the transit distance is within 80 kms.
4.2THE NEW INDIA ASSURANCE
New India is a leading global insurance group, with offices and
branches throughout India and various countries abroad. The company
services the Indian subcontinent with a network of 1068 offices,
comprising 26 regional offices, 393 Divisional offices and 648 branches.
With approximately 21000 employees, New India Assurance has the
largest number of specialist and technically qualified personnel at all
levels of management, who are empowered to underwrite and settle
claims of high magnitude.

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New India has been rated A (Excellent) by A.M. Best Co.,

making it only Indian insurance company to have been rated by an
international rating agency. Rating based on following factors:
Superior Capital Position
Strong Operation Performance
Only Company to develop significant international operations, long
record of successful trading outside India.
MISSION
To develop general insurance business in the best interest of the
community.
To provide financial security to individuals, trade, commerce and all other
segments of the society by offering insurance products and services of
high quality at affordable cost.
VALUES
Highest priority to customer needs.
High standards of public conduct.
Transparency in operations.

CATTLE INSURANCE POLICY

A smart first step
Smart policy benefit
Eligibility
Exclusions
A smart first step
The New India Assurance provides Cattle insurance compensate for death
of cattle like milch cows, buffaloes, calves/heifers, stub bulls, bullocks,
and mithuns.
Smart policy benefit

The policy compensates for death of cattle due to:

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 Accidents(including fire, riots strike and civil commotion)

Surgical operations
Diseases contracted or occurring during the period of the policy
The policy can be extended to cover permanent Total Disability on
payment of extra premium, which in case of
Milch cattle result in permanent and total in capacity to conceive or yield
milk.
Stub bulls; result in permanent and total incapacity to breed.
Bullocks, calves, heifers and castrated male buffaloes, result in permanent
and total incapacity for the purpose of use mentioned in the proposal
form.
ELIGIBILITY
The policy provides cover to cattle in identified age groups, as per
the policy terms and conditions

HIGHLIGHTS
1. This scheme covers the following whether indigenous, exotic or crossa.
b.
c.
d.

bred.
Milch Cows and Buffaloes.
Calves/Heifers
Stud Bulls
Bullocks (Castarted Bulls) and Castarted Male Buffaloes,

2. Animal within a specified age group are accepted under the Standard
Insurance Scheme.
3. Sum Insured Under the policy will be the Market Value of the animal.
4. Indemnity Under the policy will be the Sum Insured or market Value
prior to illness whichever less is. The indemnity is limited to 75 % of
Sum Insured in case of a PTD claim.
5. The basic premium rate per annum is 4% of the sum Insured. Long term
policies are also issued with long term discounts.
38

6. The premium rates under the policy are concessional for covering animals
under government subsidized schemes.
7. Group discount are also available.

Insurance Coverage
The policy shall give indemnity for death due to.
Accident (Inclusive of Fire, lighting, flood, inundation, storm, hurricane,

earthquake, cyclone, tornado, tempest and famine).

Diseases contracted or occurring during the period of this policy.
Surgical Operations.
Riot and Strike.
The Policy can also be extended to cover PTD on payment of extra

premium;
Permanent Total Disability Which, in the case of Milch Cattle

results

in permanent and total incapacity to conceive or yield milk.

PTD which in the case of Stud Bulls results in permanent and total
incapacity for breeding purpose.
In case of Bullocks, Calves / Heifers and castrated male Buffaloes results
in permanent and total incapacity for the purpose of use
mentioned in the proposal form.

Identification Of Animal
All insured animals should be suitably identified by natural
Identification marks and color should be clearly noted in the proposal
form and veterinarians Report.
Ear tags made of suitable material are applied to the ear of the
animals and the code number is entered into the veterinary Health
Certificate.
Photographs of animals may be insisted in case of high value animal.

Claims Procedure

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 In the event of death of an animal, immediate intimation should be sent to

the Insurers and the following requirements should be furnished.
Duly completed claim form.
Death Certificate obtained from qualified Veterinarian on Companys
form.
Postmortem examination report if required by the Company.
Ear Tag applied to the animal should be surrendered. The condition

of No Tag- No Claim will be applied if the tag is not surrendered.

Claim Procedure for PTD Claim
A certificate from the qualified Veterinarian to be obtained.
The animal will be inspected by the companys veterinary Officer also.
Complete chart of treatment, medicines used, receipt, etc., should be

submitted.
Admissibility of claim will be considered after two months of veterinary
Doctor / Company Doctors report.
The indemnity is limited to 75 % of sum Insured.

Major Exclusion
A)Common Exclusions:
Malicious or willful injury or neglect, overloading, unskillful treatment or
use of animal for purpose other than stated in the policy without the
consent of the company in writing.
Accidents occurring and /or Disease contracted prior to commencement
of risk.
Intentional slaughter of the animal except in cases where destruction is
necessary to terminate incurable suffering on humane consideration on
the basis of certificate issued by qualified veterinarian or in cases where
destruction is resorted to by the order of lawfully constituted authority.
Theft and clandestine sale of the insured animal.
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 War, invasion, act of foreign enemy, hostilities (whether war be declared

or not), civil war, rebellion, revolution, insurrection, mutiny, tumult,
military or usurped power or any consequences thereof or attempt threat.
Any accident, loss, destruction, damage or legal liability directly or
indirectly caused by or contributed to by or arising from nuclear weapons.
Consequential loss of whatsoever nature.
Transport by air and sea.
Any non-scheme claim arising due to diseases contracted within 15 days
from the date of risk are not covered.

B) Specific Exclusions:
Pleuropneumonia in respect of Cattle in Lakhimpur and Sibasagar
Districts and newly carved out districts out of these two districts of
Assam.
All the claims received without ear tag.

Documents to Effect Insurance Coverage

Proposal Form
Veterinary Health Certificate from a qualified Veterinarian giving the age,
identification mark, health, and market value of the animal in the
prescribed format.

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