FCS Financial staff provided an update on the 2014 crop insurance changes at the FCS Financial Ag Seminars held in February 2014. View our website, www.myfcsfinancial.com, to find a crop insurance agent near you.
Government run crop yield insurance scheme, procurement at minimum support prices and calamity relief funds are the major instruments being used to protect the Indian farmer from agricultural variability. However, crop insurance covers only about 10% of sown area and suffers from an adverse claims to premium. There are problems with both the design and delivery of crop insurance schemes. These problems could be overcome with rainfall insurance with a well developed rainfall measurement infrastructure. Private and public insurers are currently experimenting with rainfall insurance products. Given the current levels of yield and rainfall variability the actuarially fair premium rates are likely to be high and in many cases unattractive or unaffordable. Instead of adopting the easy and unsustainable route of large subsidies, in the long term the government should consider risk mitigation through improvements in the irrigation and water management infrastructure.
FCS Financial staff provided an update on the 2014 crop insurance changes at the FCS Financial Ag Seminars held in February 2014. View our website, www.myfcsfinancial.com, to find a crop insurance agent near you.
Government run crop yield insurance scheme, procurement at minimum support prices and calamity relief funds are the major instruments being used to protect the Indian farmer from agricultural variability. However, crop insurance covers only about 10% of sown area and suffers from an adverse claims to premium. There are problems with both the design and delivery of crop insurance schemes. These problems could be overcome with rainfall insurance with a well developed rainfall measurement infrastructure. Private and public insurers are currently experimenting with rainfall insurance products. Given the current levels of yield and rainfall variability the actuarially fair premium rates are likely to be high and in many cases unattractive or unaffordable. Instead of adopting the easy and unsustainable route of large subsidies, in the long term the government should consider risk mitigation through improvements in the irrigation and water management infrastructure.
by Pramod Aggarwal, CGIAR Program on Climate Change, Agriculture, and Food Security. Presented at seminar on Insuring the future of farmers under climate change. London, UK. 28 January 2015. Learn more: http://ccafs.cgiar.org/weather-index-based-insurance
This paper presents the unique challenges and opportunities on implementing Agriculture insurance in India. It also covers the historical details regarding the various insurance schemes implemented by the Government of India in the last few decades.
This presentation takes you through Prospects and insights of Crop Insurance. Solicitation of Business, Operation Features, challenges and Technological Interventions related Crop Insurance are shown.
Presentation by P Joseph, Agriculture Insurance Company, on crop insurance in India at the CCAFS Workshop on Institutions and Policies to Scale out Climate Smart Agriculture held between 2-5 December 2013, in Colombo, Sri Lanka.
It includes the condition of Agricultural Insurance before the independence and after the independence and currently running insurance scheme in 2015-16.
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.
Socio-economic factors influencing uptake of agriculture insurance by smallho...Premier Publishers
Despite a limited uptake by smallholder farmers in Zimbabwe, agriculture insurance is considered an effective tool for risk management in agriculture. The study used the Logit regression model to determine the factors that influence the uptake of agricultural insurance by smallholder farmer households in Goromonzi district of Zimbabwe using a random sample of 187 maize contracted farmers. The determinants that were of statistical significant and positively influence the uptake of agricultural insurance were age of head of household, source of extension information coming from non-governmental organisation, and farmer receiving advice on agricultural insurance. On the other hand, the determinants that significantly and negatively influence uptake of agricultural insurance are number of extension visits per month by AGRITEX and other governments departments, number of extension visits by other farmers, total income of households in a year and number of years a household head is in a farmer group. Based on the findings it is clear that the Government of Zimbabwe is not being supportive of agricultural insurance, despite having the largest number of extension staff at smallholder farmer’s exposure. It is therefore recommended that the Government of Zimbabwe through the Ministry of Agriculture, Irrigation and Mechanisation must have a policy framework on agricultural insurance training and awareness at smallholder farmer level.
Dr. Kolli Rao of Aon Benfield/IRICS presented on index-based crop insurance in India at the workshop on Mobilizing a CGIAR Agricultural Insurance Community in Washington, DC, 20-22 January 2014, hosted by the International Food Policy Research Institute and the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS). Read more about CCAFS work on index-based weather insurance: http://bit.ly/Ll7Z7Z
Webinar on Bundling agriculture index insurance with financial and non financ...Impact Insurance Facility
The WBG's Global Index Insurance Facility, the USAID and BASIS/I4-sponsored Global Action Network (GAN) and the ILO's Impact Insurance Facility organised a webinar to look into the question "How can index insurance be bundled with other financial and non financial services". This webinar featured speakers from global organizations who shared experiences and discussed which services and activities in the agriculture value chain are most aligned for bundling. It explored mechanisms and issues in bundling, and also looked into the possible impact of bundling on pricing & off-take of index insurance and measures of tracking it.
Speakers: François-Xavier Albouy (Vice President PlaNet Guarantee), Michael R. Carter (Professor and Director BASIS Research Program, University of California, Davis), Shadreck Mapfumo (Senior Financial Specialist World Bank Group) and David Muigai (Actuarial Officer ACRE).
by Pramod Aggarwal, CGIAR Program on Climate Change, Agriculture, and Food Security. Presented at seminar on Insuring the future of farmers under climate change. London, UK. 28 January 2015. Learn more: http://ccafs.cgiar.org/weather-index-based-insurance
This paper presents the unique challenges and opportunities on implementing Agriculture insurance in India. It also covers the historical details regarding the various insurance schemes implemented by the Government of India in the last few decades.
This presentation takes you through Prospects and insights of Crop Insurance. Solicitation of Business, Operation Features, challenges and Technological Interventions related Crop Insurance are shown.
Presentation by P Joseph, Agriculture Insurance Company, on crop insurance in India at the CCAFS Workshop on Institutions and Policies to Scale out Climate Smart Agriculture held between 2-5 December 2013, in Colombo, Sri Lanka.
It includes the condition of Agricultural Insurance before the independence and after the independence and currently running insurance scheme in 2015-16.
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.
Socio-economic factors influencing uptake of agriculture insurance by smallho...Premier Publishers
Despite a limited uptake by smallholder farmers in Zimbabwe, agriculture insurance is considered an effective tool for risk management in agriculture. The study used the Logit regression model to determine the factors that influence the uptake of agricultural insurance by smallholder farmer households in Goromonzi district of Zimbabwe using a random sample of 187 maize contracted farmers. The determinants that were of statistical significant and positively influence the uptake of agricultural insurance were age of head of household, source of extension information coming from non-governmental organisation, and farmer receiving advice on agricultural insurance. On the other hand, the determinants that significantly and negatively influence uptake of agricultural insurance are number of extension visits per month by AGRITEX and other governments departments, number of extension visits by other farmers, total income of households in a year and number of years a household head is in a farmer group. Based on the findings it is clear that the Government of Zimbabwe is not being supportive of agricultural insurance, despite having the largest number of extension staff at smallholder farmer’s exposure. It is therefore recommended that the Government of Zimbabwe through the Ministry of Agriculture, Irrigation and Mechanisation must have a policy framework on agricultural insurance training and awareness at smallholder farmer level.
Dr. Kolli Rao of Aon Benfield/IRICS presented on index-based crop insurance in India at the workshop on Mobilizing a CGIAR Agricultural Insurance Community in Washington, DC, 20-22 January 2014, hosted by the International Food Policy Research Institute and the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS). Read more about CCAFS work on index-based weather insurance: http://bit.ly/Ll7Z7Z
Webinar on Bundling agriculture index insurance with financial and non financ...Impact Insurance Facility
The WBG's Global Index Insurance Facility, the USAID and BASIS/I4-sponsored Global Action Network (GAN) and the ILO's Impact Insurance Facility organised a webinar to look into the question "How can index insurance be bundled with other financial and non financial services". This webinar featured speakers from global organizations who shared experiences and discussed which services and activities in the agriculture value chain are most aligned for bundling. It explored mechanisms and issues in bundling, and also looked into the possible impact of bundling on pricing & off-take of index insurance and measures of tracking it.
Speakers: François-Xavier Albouy (Vice President PlaNet Guarantee), Michael R. Carter (Professor and Director BASIS Research Program, University of California, Davis), Shadreck Mapfumo (Senior Financial Specialist World Bank Group) and David Muigai (Actuarial Officer ACRE).
Building the next generation of farmers
Supporting capacity-development of African Farmer’s Organisations through improved Policies, Technologies and Capabilities
Workshop , 6-7 November 2018, Brussels
Scaling up agricultural insurance – The role of financial institutions and ag...Francois Stepman
8 April 2020. Webinar. Scaling up agricultural insurance – The role of financial institutions and agribusinesses as distribution channels
MFW4A and the German Agency for International Cooperation (GIZ) hosted a webinar entitled:" Scaling up agricultural insurance – The role of financial institutions and agribusinesses as distribution channels ".
Presentation by Ulrich Hess, Senior Advisor, GIZ, at the Scaling up agricultural adaptation through insurance conference, on the sidelines of SBSTA. https://ccafs.cgiar.org/scaling-agricultural-adaptation-through-insurance
Partnerships for financing climate risk protection in Viet NamUNDP Climate
High-level inter-ministerial workshop held in Hanoi June 6-7, 2017 hosted by the Ministry of Agricultural Development (MARD) of Viet Nam and supported under the Integrating Agriculture in National Adaptation Plans (NAP-Ag) Programme. The meeting was attended by over 75 national and provincial level government officials, including MONRE, MARD, MPI and the Ministry of Finance (MOF), UN and development partners, private sector representatives including insurance companies, as well as non-governmental organisations.
Crop Insurance Market Growth, Demand and Challenges of the Key Industry Playe...IMARC Group
The global crop insurance market size reached US$ 43.7 Billion in 2023. Looking forward, IMARC Group expects the market to reach US$ 69.9 Billion by 2032, exhibiting a growth rate (CAGR) of 5.1% during 2024-2032.
More Info:- https://www.imarcgroup.com/crop-insurance-market
The sustainability of agriculture insurance programmes relies primarily on reaching scale and controlling the costs of distribution. With this in mind, insurers are designing meso-level insurance policies that cover the entire portfolio of an aggregator. But while there are promising gains, there is still much to learn from implementing these solutions to achieve scale and efficiency.
Jointly organized by the Global Index Insurance Facility and the ILO’s Impact Insurance Facility, this webinar discussed opportunities and challenges in meso-level distribution. It presented diverse viewpoints on aggregate distribution and portfolio covers and the roles of various stakeholders. It highlighted experiences of scaling up and how such initiatives impact customer understanding and client value.
Crop Insurance, the Backbone of Indian farming communityIssues and ChallengesIJERA Editor
The dynamism of the farming sector, and its environment, is reflected in developments in the design of new
insurance products. In the last decade two types of new products have been introduced. In some cases these have
partially displaced existing covers; in others they have resulted in demand from new clients. Implementation of
technology in farming usually involves investment. Such changes also frequently alter the risk profile of the
enterprise. There are occasions when insurance can be a key component in a range of risk management
strategies for the insurers. From an administrative point of view bank-insurer linkages make a lot of sense, since
both these providers of financial services require similar client data.
This type of link, crop insurance and loans, is already very common, both in developing and developed
agriculture. The vast, heavily subsidized scheme in India is largely linked to bank lending. So instead of the
usual policy wording, such as indemnity, or range of indemnity levels, or a per hectare basis for a given crop,
for losses from specific causes, the coupon merely gives a monetary sum which becomes payable on
certification that the named weather event, of specified severity, has occurred. Again the role of state is very
important making available crop insurance on a large scale, as they are public good in nature. Recently in
Odisha, for crops such as Niger, cotton, red grams, jute, turmeric, ginger and banana, the farmers of selected
blocks in some district could take advantage of the scheme. Because indemnity claim is settled only on the basis
of yield data furnished by the State government. Hence the criteria that is based on requisite number of crop
cutting experiments conducted under general crop estimation surveys should be supported by State to offer
desired result in crop insurance.
* Describe the factors leading to increased dependence on agricultural insurance
* Recognize the operational risks faced by farms due to falling prices and loss of insurance
* Explain the benefits of linking Farm Management System with crop insurance
* Identify the insurance selling opportunities
A presentation by Stephen Muchiri, from Eastern Africa Farmers Federation (EAFF) and CEO of e-Granary, about a commercial digital platform linking smallholder farmers in East Africa to targeted services.
The e-Granary platform, an ambitious venture initiated by the EAFF is in its relatively early days serving producers in Kenya, Uganda and Rwanda. It aims to strengthen their position with other actors such as buyers, input traders and financial institutions, and it has generated many lessons and challenges to overcome.
The presentation was given at a webinar on using technology to increase market and finance access for smallholders hosted by the International Institute for Environment and Development (IIED) on 24 March 2020.
More details: https://www.iied.org/webinar-using-technology-increase-market-finance-access-for-smallholders
De la Fédération des organisations de producteurs de l’Afrique de l’Est (EAFF), la confédération des syndicats agricoles de l'Afrique australe (SACAU), le Réseau des organisations paysannes de l’Afrique de l’Ouest (ROPPA) et le Réseau des producteurs agricoles des agriculteurs de l'Afrique centrale (PROPAC) ont organisé leur 2ème Briefing Continental au Kenya les 13-14 Juillet sur la promotion de modèles financiers inclusifs pour les agriculteurs en Afrique. Environ 120 producteurs, chercheurs et institutions financières ont discuté des domaines clés résumés ci-dessous. Ce débat a été amplifié par un discussion électronique sur la plateforme de la PAFO. Quelques points clés sont résumés ci-après également. Un plan d'action a été élaboré pour les 12 prochains mois.
The Eastern African Farmer’s Federation (EAFF), the Southern African Confederation of Agricultural Unions (SACAU), the Network of Farmers' and Agricultural Producers' Organisations of West Africa (ROPPA) and the Network of farmer’s agricultural producers of Central Africa (PROPAC) hold their 2nd Continental Briefing in Kenya on 13-14 July on Promoting inclusive finance models for farmers in Africa. Around 120 farmers, research, finance institutions discussed key areas highlighted below. This debate was amplified by an e-discussion held within the farmer’s platform which key points are also summarized below. An action plan was drawn up for the next 12 months.
1. Importance of Data to give access to agriculture insurance to small-
scale farmers, 2nd African Continental Briefing
Nairobi, 14 July, 2014
Agrotosh Mookerjee FIA, Principal Actuary, MicroEnsure
2. 1. BACKGROUND TO OUR AGRICULTURE PROGRAMS;
2. HOW DOES AGRICULTURE INSURANCE WORK;
3. DATA REQUIREMENTS FOR AGRICULTURE INSURANCE;
4. ROLE OF DIFFERENT STAKEHOLDERS;
5. RECOMMENDATIONS FOR DATA COLLECTION.
AGENDA
3. Background to MicroEnsure
MicroEnsure: A specialist provider of
insurance to the low and middle-income
market with more than 10 million active
clients in 13 markets across Africa, Asia
and the Caribbean.
We provide a range of life, health,
property and weather-index products via
a range of distribution partners that
include microfinance companies, banks,
co-operatives and mobile network
operators.
4. Recent Projects world-wide
COUNTRY DISTRIBUTION CHANNELS CROPS INSURED NUMBER OF FARMERS INSURED
(approximate)
ZAMBIA Contract Farming Cotton 7,000
RWANDA Linked to Lending, Farm Inputs,
Farmer Cooperatives
Rice, Maize, Irish
Potato
21,000
MALAWI Linked to Lending, farmer union,
church organisation
Tobacco,
Groundnut,
Maize
16,000
TANZANIA Linked to lending, contract
farming, farm inputs, NGO
Sunflower,
Safflower, Beans,
Cotton, Maize
2,000
KENYA Farm Inputs Maize 3,000
UGANDA,
GHANA
Technical Consultancy support to insurance industry,
to develop crop insurance products.
n/a
PHILIPPINES Input supplier Rice 5,000
CARRIBBEAN Retail Livelihood
protection
1,000
Approx. 60,000 farmers in 5 countries (Kenya, Malawi, Rwanda, Tanzania, Zambia) in
Africa insured in 2013. Approx. 5,000 farmers have received payouts in 2013.
5. PRODUCT TYPES
THE DIFFERENT TYPES OF AGRI-INSURANCE PRODUCTS FOR LOW-INCOME
PEOPLE
• Indemnity Insurance- if farmer suffers a loss (of outcome or revenue) the
insurance compensates farmers;
• Weather Indexed Insurance (WII)- insurance linked to weather events as
measured on a certain basis (using either weather stations and/or satellite
data);
• Area Yield Insurance- insurance linked to the crop yield as measured officially
(using crop cutting experiments, survey data etc).
5
6. How Does WII Work?
1. Satellite estimation
of rainfall over
farmers’ fields
(aggregated); Use
weather stations in
some cases
7. How Does WII Work?
2. Satellite data available daily, dekadal,
monthly, currently dekadal source used;
AWS data available in some cases,
manual WS data takes longer and less
reliable
8. How Does WII Work?
3. Data monitored
regularly and
compared to
product triggers and
other parameters.
Typical events
covered are dry
spells, droughts,
excess rainfall etc.
9. How Does WII Work?
4. Once trigger thresholds are reached,
insurer notified of claim event and
claim processed. In some cases, indexed
payouts may be adjusted due to other
conditions (e.g. underinsurance) and
discretionary payouts may be made.
Scope for adding other types of agri-
insurance (e.g. indemnity) if applicable.
Payout usually made directly to client
(not farmers).
10. Main Distribution Channels
Weather Indexed Insurance (WII) linked to Agriculture Lending- sold to individual
small-holder farmers & groups of farmers via Banks/ MFIs/ others.
Portfolio Product
WII sold to Institutions wanting to reduce
risk of lending in agriculture sector-
promotes better risk management &
allows more investment in agriculture.
Sales Promotion Product
WII linked to farm inputs (e.g. seeds),
which give increases uptake, improves
ongoing loyalty & protects
farmers/reduces defaults.
Savings linked Product
WII linked to regular savings, which
incentivizes savings towards a goal, while
protects customers from adverse events.
Packaged Product (Contract Farming)
Packaged product (WII + Life + Health),
which improves loyalty, reduces side-
selling/ defaults & gives valuable
protection for farmer and family.
11. BENEFITS OF INSURANCE FOR VALUE-CHAIN
11
Farmers
Insurer
Reinsurer
Contract
Farming
Farm Inputs
Banks/MFIs
Retail
market
NGOs/ Agri-extension
services/ Agri-
organisation etc.
Satellite data
source
Meteo Office
RegulatorGovernment
12. MAIN BENEFITS OF INSURANCE FOR VALUE-CHAIN
FARMERS/ FARMER GROUPS:
1) Better access to finance/ potentially better credit terms (insurance as collateral);
2) Lowers income fluctuation, protects livelihood, disaster relief;
3) Better access to farm inputs/ other extension services/ contracts;
4) Protects farmers from risks, which are difficult to self-insure within group;
5) Potentially benefit from subsidised/ free insurance with collaboration with other
value-chain players;
6) Can assist in deciding on farming practices and decisions.
12
Farmers
Insurer
Reinsurer
Contract
Farming
Farm Inputs
Banks/MFIs
Retail
market
NGOs/ Agri-extension
services/ Agri-
organisation etc.
Satellite data
source
Meteo Office
RegulatorGovernment
13. BENEFITS OF INSURANCE FOR VALUE-CHAIN
BANKERS, MFIS, AGRI-BUSINESSES
1) More loan disbursement (on risk informed basis);
2) Reduces portfolio lending risk;
3) Promote sale of inputs (marketing tool);
4) Reduces side-selling/ more retention of farmers/ more take-up;
5) Incentivizes more production (by rewarding farmers with free insurance);
6) Can differentiate themselves from competition.
13
Farmers
Insurer
Reinsurer
Contract
Farming
Farm Inputs
Banks/MFIs
Retail
market
NGOs/ Agri-extension
services/ Agri-
organisation etc.
Satellite data
source
Meteo Office
RegulatorGovernment
14. BENEFITS OF INSURANCE FOR VALUE-CHAIN
1) Govt- objective of increased financial access/ more investment in agriculture/ micro-
disaster relief management;
2) (Re)Insurer- can be profitable business/ reduces overall risk;
3) Weather agencies- tangible use of weather data/ could charge fees for additional
services
4) Retail buyers- can tie in with Fair Trade models/ additional benefit for farmers
5) Other organisations- Financial inclusion/ link to markets/ platform for further agri-
extension services
14
Farmers
Insurer
Reinsurer
Contract
Farming
Farm Inputs
Banks/MFIs
Retail
market
NGOs/ Agri-extension
services/ Agri-
organisation etc.
Satellite data
source
Meteo Office
RegulatorGovernment
15. Data Components and Importance
WEATHER DATA
CROP DATA
GROUND-TRUTHING
MARKET DATA
CUSTOMER FEEDBACK
INSURER FEEDBACK
From Satellites and/or Weather Stations-
Measurement of historical and live weather conditions
to aid in product development, pricing, claims process
Volumes, taxes, charges, expenses, premium
caps/floors, regulatory/political and business
environment- Need to develop product in local context
Customer feedback- to fine-tune product, trade-off
between price and type of product, decision making
of farmer’s/ agri-business’s behalf.
Insurer feedback- to gauge risk appetite, technical
capacity, reinsurance arrangements, solvency
Crop Yield, Agronomical information, Definition of
weather events, experience of bad years, locations, loss
events- Need to establish link between weather
conditions (or other basis of insurance) and agriculture
losses. To validate product design and ensure suitability
for local conditions and experiences. Difficult to obtain
16. Data Components
WEATHER DATA
CROP DATA
GROUND-TRUTHING
MARKET DATA
CUSTOMER FEEDBACK
INSURER FEEDBACK
Weather
Station data
Crop Yield
Risk appetite and
capacity
Feedback on draft
product
Agronomical
information
Definition of
weather events
Experience of
bad years
Location, volumes
and market info
Satellite data
Aggregators
(including Financial
Institutions)
Farmer
Organisations
Governments and
policymakers
Meteorological
agencies
Other Research
bodies
Insurers
17. DATA ROLES FOR STAKEHOLDERS
Farmer
Groups
Aggregators Govt Research
bodies
Meteorological
agency
Insurers
Weather Station Data
Satellite Data
Crop Yield Data
Agronomical info
Experience of bad
seasons and losses
Info on economics,
political and business
context
Feedback on product
Insurer appetite and
capacity
17
18. SUMMARY RECOMMENDATIONS
1. Farmer Organisations should compile crop data, agronomical knowledge
and experience of bad seasons experienced and give feedback on
product.
2. Aggregators (Financial Institutions, Agri-business, NGOs) should
compile crop data, experience of agric losses and give constructive
feedback on product.
3. Government and policymakers should create/facilitate databases for
crop data and tie-up with available weather data (much of which is
publicly available but sometimes in other countries). Should support set
up of agriculture (e.g. tax waiver), consider macro-level weather index
insurance (e.g. for disaster relief) and follow best-practice regulations.
4. Research bodies and meteorological agencies should maintain database
for crop, weather and market data.
5. Insurance industry should actively consider underwriting strategy, build
technical and operational capacity and arrange suitable reinsurance/co-
insurance arrangements.
6. Product developers/enablers should also focus on capacity building and
training local stakeholders in order to increase product understanding
and facilitate data collection. Local ownership is key for sustainability.
18
19. THANK YOU FOR LISTENING
agrotosh.mookerjee@microensure.com