Crop & Livestock Insurance in Nepal: 80% Subsidy and How to Claim

Agriculture employs the majority of Nepal's workforce, yet a single hailstorm, flood, disease outbreak or the death of a milking buffalo can wipe out a smallholder family's income for the year. To spread that risk, Nepal runs a state-subsidised agricultural insurance scheme, popularly known as krishi bima (crop insurance) and pashu bima (livestock insurance). Regulated crop and livestock insurance began on 1 Magh 2069 BS (mid-January 2013), when the regulator Beema Samiti (Insurance Board) issued the Crop and Livestock Insurance Directive 2069 and required non-life insurers to sell standard farm policies.

The scheme is a joint effort of two institutions. The Nepal Insurance Authority (NIA) — the regulator that replaced Beema Samiti under the Insurance Act 2079 (2022) — sets the standard policy wordings, premium rates and claim rules through its Agriculture, Livestock and Herbs Insurance Directive 2079 (Krishi, Pashupanchhi tatha Jadibuti Bima Nirdeshika), which came into force on 1 Shrawan 2079 (17 July 2022). The Ministry of Agriculture and Livestock Development (MoALD) funds the premium subsidy from the federal budget, so the farmer pays only a small share of the premium while the government pays the rest directly to the insurer.

To make sure policies are actually available in rural areas, the regulator has allocated designated districts to each non-life insurance company. Under the 2079 directive, an insurer may not refuse a farm insurance proposal received in its assigned district, must maintain an office near the district's Agriculture Knowledge Centre, and must run a dedicated agriculture and livestock insurance unit staffed with agricultural and veterinary technicians.

When the programme launched in January 2013, the Government of Nepal subsidised 50 percent of the premium. The subsidy was raised to 75 percent in 2014 to boost uptake, and after some fluctuation in intermediate years it was increased to 80 percent in 2021 — the headline rate that state-owned insurer Rastriya Beema Company and other non-life insurers advertise today. In practical terms, if the annual premium on an insured buffalo is Rs 5,000, the farmer pays only Rs 1,000 and the government covers Rs 4,000.

In 2025 the Ministry of Agriculture and Livestock Development introduced the Guidelines for Providing Subsidies on Crop and Livestock Insurance Premiums, which tiered the subsidy by policy size so that public money is concentrated on smallholders: small policies keep the full 80 percent subsidy, while large commercial farms receive a lower share. The insurer collects the farmer's share and claims the subsidised portion from the government.

Separately, the regulator has pushed supply-side obligations onto insurers. An amendment to the agriculture insurance directive announced in December 2020 requires that crop and livestock policies make up at least 5 percent of the total number of policies issued by every non-life insurance company. Insurers must also run annual training for agricultural technicians and loss assessors in their designated districts, in coordination with federal, provincial and local governments and the regulator.

The standard products approved under the NIA directive cover three broad groups: crops (cereals such as paddy and maize, vegetables, fruits, mushrooms and cash crops such as ginger and turmeric), livestock (cattle, buffalo, yak, sheep, goats and pigs) and birds and aquaculture (poultry, ducks and farmed fish), plus medicinal herbs (jadibuti). By the early 2020s more than 22 approved agricultural insurance products were on the market.

Crop policies are multi-peril: they compensate loss of the insured crop caused by drought, excess or unseasonal rain, flood, landslide, hailstorm, windstorm, frost and snow, fire, earthquake, disease and insect or pest attack, and in many products damage by wild animals. Livestock and poultry policies pay out when an insured animal dies from disease or accident, and standard cattle policies also compensate permanent total disability — for example, when a milking cow or draft ox permanently loses its productive capacity.

Exclusions matter, however. Losses from theft or straying of animals, deliberate neglect, and certain epidemics handled separately by the state (local government information pages list avian influenza in poultry as a common exclusion) generally fall outside standard cover, and pre-existing illness discovered at enrollment will void a claim. Farmers should read the schedule of their specific policy, since perils and waiting periods differ between crop, livestock, poultry and fish products.

The insured value is set at enrollment and determines both the premium and the payout. For crops, the sum insured is based on the estimated production cost of the insured area, using cost norms published by the agriculture ministry and its district offices. For livestock, it reflects the animal's market value — the 2079 directive allows valuation by local prevailing price, purchase invoice or an agreed market rate — certified on the proposal form by a veterinarian or livestock technician. District-level offices anchor this process: Agriculture Knowledge Centres (crops) and Veterinary Hospital and Livestock Service Expert Centres or local-level livestock sections (animals) provide the technicians who verify health, value and identity.

Premium rates are standardised. The benchmark rate for livestock (cattle, buffalo, goats and similar animals) is 5 percent of the sum insured per year, with the government paying 80 percent of that premium for policies within the subsidy ceiling. Crop insurance is likewise priced around 5 percent of the insured production cost, while short-cycle poultry batch policies (about 1.25 percent per batch) and fish farming policies (about 2 percent) are cheaper. The 2079 directive also gives a 5 percent discount on premium when a farmer buys directly from the company rather than through an agent.

Payouts follow fixed percentages rather than the full face value. If an insured animal dies from a covered disease or accident, the insurer pays 90 percent of the sum insured; permanent total disability of the animal pays 50 percent. For crops, total loss pays up to 90 percent of the insured production cost, while partial losses are paid in proportion to the damage assessed in the field by technicians or a licensed surveyor.

Any farmer, farmer group, cooperative or agri-business can buy subsidised farm insurance from a non-life insurance company operating in their district; many farmers enroll through dairy or savings cooperatives, which arrange group policies allowed under the directive. Enrollment is designed around verification by an agricultural or veterinary technician so that the insured value and the identity of the animal or crop are documented before any loss occurs.

For livestock, the animal receives a numbered ear tag at enrollment and its distinguishing marks are recorded (some insurers also photograph or video the animal) so it can be identified at claim time; claims are routinely rejected when the tag cannot be produced. For crops, the plot location, area and variety are recorded, and minimum insurable areas apply in some products (local guidance cites about 1 kattha in the Tarai or half a ropani in the hills for vegetable plots).

The claim process is time-bound, so act quickly. Government agricultural extension guidance tells farmers to notify the insurance company of a death or crop loss within about 3 days of the event, and to submit the completed claim documents within roughly 15 days; the exact windows are printed in each policy. Do not dispose of a dead animal before it has been examined — the post-mortem report and the ear tag are the two pieces of evidence no livestock claim can do without.

For a dead cow, buffalo or goat, a veterinarian or livestock technician performs a post-mortem and issues a death certificate stating the cause of death; the local veterinary office or livestock service section can provide the recommendation letter insurers ask for. Photos of the carcass showing the ear tag, the tag itself, the policy and the filled claim form complete the file. For crops, the insurer's technicians inspect the damaged field and estimate the percentage of loss against the insured production cost.

Under the 2079 directive, the insurer may assess losses up to Rs 500,000 with its own technical staff, while larger claims must be evaluated by a licensed surveyor (loss assessor). Once the file is complete, settlement is due within about 30 days, paid to the farmer's bank account. If a claim is unreasonably delayed or rejected, the farmer can complain to the insurer's head office and then to the Nepal Insurance Authority, which handles policyholder grievances.

The subsidy has made farm insurance one of Nepal's fastest-growing non-life lines. Annual agricultural premiums grew from about Rs 22.6 million in FY 2070/71 (2013/14) to Rs 1.9 billion in FY 2077/78 (2020/21), when the government paid roughly Rs 1.42 billion in subsidy, and claims rose from 802 in the first year to around 36,000 a year by 2023/24. Over the scheme's first twelve years the government spent about Rs 6.3 billion on premium subsidies, while insurers collected Rs 8.31 billion in agricultural premiums and paid out about Rs 7.28 billion in claims — a very high claims ratio by non-life standards.

The programme is heavily skewed towards animals: livestock accounts for roughly 95 percent of agricultural insurance, with crop insurance only about 5 percent, because livestock losses are easier to verify and cattle and buffalo are often pledged against cooperative loans that require insurance. The scheme has also had funding stress — in 2024 the Kathmandu Post reported that non-life insurers had paused settling farm claims from mid-March of that year because government subsidy reimbursements of about Rs 3 billion were overdue, a reminder that payout speed can depend on the state of the subsidy fund.

Three practical rules follow. Insure animals at a realistic certified value, because under-valuation cuts your payout and over-valuation invites disputes; guard the ear tag, because 'no tag' usually means 'no claim'; and enroll through an active cooperative or an insurer with a nearby branch, since claims move faster when a local technician can inspect losses quickly. Subsidy tiers, covered species and premium rules are revised periodically in the federal budget and NIA directives, so confirm the current year's terms with your insurer or Agriculture Knowledge Centre before enrolling.