IGIDR-IFPRI - Innovative Crop Insurance Scheme, K. N. Rao, Aon Benfield

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Indira Gandhi Institute for Development Studies(IGIDR), and the International Food Policy Research Institute (IFPRI) on
‘Harnessing Opportunities to Improve Agri-Food Systems’ on July 24-25 , 2014 in New Delhi.
The two day conference aims to discuss the agricultural priority of the government and develop a road map to realise these priorities for improved agri food systems.

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IGIDR-IFPRI - Innovative Crop Insurance Scheme, K. N. Rao, Aon Benfield

  1. 1. 0 Innovative Crop Insurance Program Kolli N Rao July 2014
  2. 2. 1 World Crop Market-2012 Capabilities – Agriculture Speciality  Worldwide agriculture insurance premium has quadrupled since the beginning of the century  Asia accounts for over 28% of the Total Premium and will continue to grow Rest of World 71.0% APAC 29.0% Worldwide Premium - USD 23b China 64.0% Japan 18.9% India 12.4% Korea 3.0% AU & NZ 1.7% APAC Premium - USD 6.7b
  3. 3. 2 Indian Crop Market Capabilities – Agriculture Speciality - 5,000 10,000 15,000 20,000 25,000 30,000 2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14(Est.) INRMillions Year NAIS MNAIS WBCIS
  4. 4. Value: Fair and Timely settlement of claims
  5. 5. Insurance: Expectation
  6. 6. Farmers Adequate risk coverage Comprehensive risk protection Affordable premium Fair and transparent loss assessment Prompt claim settlement Quick grievance redressal Insurance: Expectation
  7. 7. Farmers Adequate risk coverage Comprehensive risk protection Affordable premium Fair and transparent loss assessment Prompt claim settlement Quick grievance redressal Government Protecting farmers Food security Close ended fiscal exposure Free from ad-hoc assistance Meshes with other risk mitigation measures Sustainable Insurance: Expectation
  8. 8. Farmers Adequate risk coverage Comprehensive risk protection Affordable premium Fair and transparent loss assessment Prompt claim settlement Quick grievance redressal Government Protecting farmers Food security Close ended fiscal exposure Free from ad-hoc assistance Meshes with other risk mitigation measures Sustainable Insurance industry Viable (Critical numbers, spread, control) Stability and consistency in policies Operating expenses under control Business proposition Insurance: Expectation
  9. 9. Innovation: Scope
  10. 10. Product A: Production Risk B: Income Risk A: Production Risk 1. Index (Yield, Weather, Crop health) 2. Traditional 3. Index Plus 4. Double Trigger Insurance Innovation
  11. 11. Product Production Risk Income Risk Production Risk Index (Yield, Weather, Crop health) Traditional Index Plus Double Trigger Distribution Banks Agents Micro Agents Brokers Direct Online Insurance Innovation
  12. 12. Product Production Risk Income Risk Production Risk Index (Yield, Weather, Crop health) Traditional Index Plus Double Trigger Distribution Banks Agents Micro Agents Brokers Direct Online Insurance Innovation Financing Ways (1)Claims subsidies (2)Premium subsidies (1) or (2) + infrastructure support / extreme losses
  13. 13. Product Production Risk Income Risk Production Risk Index (Yield, Weather, Crop health) Traditional Index Plus Double Trigger Distribution Banks Agents Micro Agents Brokers Direct Online Loss Assessment Area Yield estimation (sub-district/GP) Weather data (~15 Km radius) Individual farm assessment Weather data (part1)+ individual farm (part2) Insurance Innovation Financing Ways (1)Claims subsidies (2)Premium subsidies (1) or (2) + infrastructure support / extreme losses
  14. 14. Product Production Risk Income Risk Production Risk Index (Yield, Weather, Crop health) Traditional Index Plus Double Trigger Distribution Banks Agents Micro Agents Brokers Direct Online Loss Assessment Area Yield estimation (sub- district/GP) Weather data (~15 Km radius) Individual farm assessment Weather data (part1)+ individual farm (part2) Insurance Innovation Financing Ways (1)Claims subsidies (2)Premium subsidies (1) or (2) + infrastructure support / extreme losses Time for Settlement of claims Yield: 6-9 months Weather: 2-4 months Farm: 1-2 months
  15. 15. Innovation: Going Forward
  16. 16. Going Forward Backing & support Agri-risk Protection Act (inter-connections, protocol, fund availability) Technical control and hand-holding Target Protection & Financing Double-layered product target: catastrophe layer (mandatory and largely free) + commercial layer infrequent risks (with smaller subsidy) Product bouquet Double trigger product Index Plus / Community based Revenue Use of ICT to control moral hazard, as also to enhance the value of insurance
  17. 17. Going Forward Data (yield, weather, price, insurance data) Weather infrastructure, secondary data Down-scaling of yield data with RST Price data Nationally Consistent Database Insurance Education Awareness Capacity building Insurance Agency Model Competition – Product, rate & services (existing) Centralized – (standard product features, prices) service Insurance pool Reinsurance pool
  18. 18. 17 Aon Benfield Asia 80 Raffles Place #42-01 UOB Plaza Singapore 048624 tel: +65 6535 6511 fax: +65 6532 2977 www.aonbenfield.com Contact Kolli N Rao agri-ins@irics.co.in kolli.rao@aonbenfield.com +91 22 24180699 +91 9167323795

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