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Evolving models for managing agricultural risks for farmers in India
In India a number of different crop insurance products have been designed over the years to protect both farmers and their lenders in the event of crop failure. A government-supported crop insurance scheme based on yield data has been running for about 20 years now, but it has proved to be costly to the government and unpopular with farmers owing to the slowness of the claims procedure. BASIX, in collaboration with ICICI Lombard, an insurance company, and the World Bank, has developed and launched a weatherbased insurance product which has a simpler claims procedure and reduces the administration costs considerably; it is also available to poorer farmers who have not taken out bank loans. This scheme has only been running for four years, but so far it has covered its risk costs, i.e the claims paid out have been less than the premium collected.
In India a number of different crop insurance products have been designed over the years to protect both farmers and their lenders in the event of crop failure. A government-supported crop insurance scheme based on yield data has been running for about 20 years now, but it has proved to be costly to the government and unpopular with farmers owing to the slowness of the claims procedure. BASIX, in collaboration with ICICI Lombard, an insurance company, and the World Bank, has developed and launched a weatherbased insurance product which has a simpler claims procedure and reduces the administration costs considerably; it is also available to poorer farmers who have not taken out bank loans. This scheme has only been running for four years, but so far it has covered its risk costs, i.e the claims paid out have been less than the premium collected.
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