New technologies for better insurance:
Picture Based Crop Insurance
Berber Kramer (B.Kramer@cgiar.org)
IFPRI Research team:
Miguel Robles (M.Robles@cgiar.org)
Francisco Ceballos (F.Ceballos@cgiar.org)
New Delhi, December 21 2016

Why do farmers lack crop insurance?
• Farmers too remote and too small for indemnity insurance
• Administrative costs
• Costs of loss verification
• Monitoring of cheating / Moral hazard
• Index insurance
• Basis risk
• Beyond the control of the farmer
• Technological innovations:
• Satellites: Difficult to understand, cloud cover
• Drones: Better resolution but high operational cost
• Generally: High biodiversity and small scale
• How to bundle the best of these worlds?

Opportunity:Rise of Smartphones
Source: Global Attitudes Spring 2015 & 2014, PEW Research Center
In 2015, there were 220 million unique smartphone users in India

Greenness index estimation
Onlineserver
GCC reference curve
GCC curve
Machine learning
Low-cost loss
assessment
Farmers
take
pictures
Additional information
CCE
A hybrid insurance approach

Wecantestwaystolimitmoralhazard
Remote sensing from above to detect
anomalous behavior?
Use nearby
farmers as a
benchmark?
Pictures, data, sensors
Experts
/Agronomists
- Weather
stations
- Satellite
images…
Agro-advise
Use agro-advisories?

Bundled with other services
• Use pictures to provide agro-advisory services
• This is a natural complementarity
• PBI is already collecting rich field data
• Data can be analyzed by experts to provide advise
• Incentive to report truthfully and not cheat the system
Pictures, data, sensors
Experts
/Agronomists
- Weather
stations
- Satellite
images…
Agro-advise

What do we need to get there?
• Pictures and data for machine learning
• Not only pictures of damage: Algorithms will need
both damaged and non-damaged pictures
• Not only data on yields: Farmers’ perceived damage,
causes of damage, practices, etc.
• High-frequency at first in order to estimate optimal
frequency and need for standardization
• Farmers’ interest in such products
• Not only their willingness to pay
• Also impacts on behavior: investments and cheating

IFPRI’s Picture Based Crop Insurance
• States:Punjab&Haryana
• 6districts
• 50villages
• 750farmers
• Wheatcrop(winter/rabi)

Wheat Cam
Firststeptowardsnewcropinsuranceapproach
• Collectpicturesanddatawithhighfrequency
• Includeperceived damageandcauseofdamage
• Practices andinputuse(seed andsoiltype,fertilizer,etc.)
• Yieldsattheendoftheseason (cropcut)
• Assesspracticalfeasibility
• Canfarmers usetheappandsubmitpictures?Howoften?
• Canwepredictdamage(orevenyield)onthebasisofthepictures?
• Assessfarmers’interestin,andresponseto,suchproducts

Smartphone app
• Android app
• User friendly
• Facilitates taking pictures at exactly same location
• Relies on GPS coordinates
• Short survey after taking picture
• Important for later analysis
• Input use and practices
• Currently standardized procedures with reference poles
and auxiliary poles
Wheat Cam

Auxiliary
Pole
Reference Pole

Aplicación
Android

Addingsites…

Capturing initial picture…

Choosesite
Capturing repeat pictures…

Picturecanbe
takenonlybetween
10AMand2PM…
Capturing repeat pictures…

Initialpictureshownasghost
imageinthebackground…
Capturing repeat pictures…

Capturing repeat pictures…

Afterwards,thefarmer
answersafewquestions…
(dataformachinelearning)

N = 1317

As of now, 290 (22.02%) pictures where farmer
selected ‘Yes’.
- 3 fully damaged
- 33 partially damaged
- 257 slightly damaged
No visible damage in 11.7% of these pictures.

Take-up of the technology

Example of good pictures

Example of good pictures

Example of good pictures

Example of bad pictures

Example of bad pictures

Example of bad pictures

Committee of
experts
Reviews pictures
+
additional
information
Onlineserver
Loss assessment
(or field visit)
Farmers
take regular
pictures
This year
Machine
learning

Advantages and Disadvantages
If smartphone pictures accurately capture damage, then
picture-based crop insurance can contribute:
Lower basis risk (going back to indemnity product)
Easy to understand, easy to relate to (farmer is at the center)
Complements weather index-based products
Leverages increasing use of smart-phones
Feasible for the insurance companies
Main risk: Potential moral hazard
To what extent is there moral hazard? (this year)
How to design the product to limit potential hazard?

THANK YOU
Questions: B.Kramer@cgiar.org