Beed model
Also called: 80:110 model, Profit and loss sharing model · Topic: Rural Credit, Microfinance and Financial Inclusion · NCERT: Beyond NCERT
Meaning
The Beed model is a way for the state and the insurance company to share profit and loss under crop insurance. It started in Beed district, Maharashtra. The insurer pays claims up to 110% of the premium collected, and the state pays any claims above that. If claims are less than 80% of the premium, the insurer keeps up to 20% of the premium as its margin and refunds the rest to the state. This stops insurers from making windfall profits in good years. States can also choose variants such as 80:110 or 60:130.
Example
Take ₹100 of premium:
- If claims are ₹150, the insurer pays ₹110 and the state pays ₹40.
- If claims are only ₹60, the insurer keeps ₹20 as its margin and refunds ₹20 to the state.
Don't confuse with
- Standard PMFBY cost-sharing: this is how the premium is paid. Farmers pay 2% for kharif crops, 1.5% for rabi crops and 5% for commercial and horticultural crops, and the Centre and state share the rest 50:50. The Beed model deals with how claims and surpluses are shared, not how the premium is paid.