Weather insurance                  /Rainfallinsurance      “An insured’s perspective”                Feedback from a proje...
Background : perspective and possiblebiases !! 2 partners – Sajjatha sangh & SEWA Marginal differences in products ----...
The partner agencies- products             agencies-SEWA                      Sajjatha SanghGeneric                   Crop...
sewaSajjatha sangh  Palmer index : is a soil moisture algorithm calibrated for relatively homogeneous regions. ( scales)
Partner agencies- Kharif 2010           agencies-Particulars     SEWA                 Sajjata SanghPolicies issued 6384   ...
SEWA                                                                                  Some Observations              2006 ...
MODEL AGRICULTURE INSURANCE VILLAGE:WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2010)                                     ...
MODEL AGRICULTURE INSURANCE VILLAGE:WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2010)                                     ...
Model Village – Bhatkhota !!- Tribal community dominated- AWS in the village- Enrollment of all villagers- Actual enrollme...
Poor understanding of rainfallinsurance mechanism and policydetails even among the adoptedA sub-optimal payout experience ...
Conclusions Awareness matters (FL): Educated & financially  literate are significantly more likely to purchase rainfall  ...
Conclusions Traditional Marketing interventions may not work...  it is no sell and go product. But, selling by known NGO...
Thank you for your time   Contact : ahmedabad@nabard.org             bs.suran@nabard.org
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Dr. B.S.Suran

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This is a brief result of a pilot project on rainfall ( weather insurance) in Gujarat . Financially supported by NABARD. The objective is to assess the acceptability of the product by the farming community , so as to convince the State Govt to support the initiative. Presently the State Govt only supports the normal NAIS- normal crop insurance scheme

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Dr. B.S.Suran

  1. 1. Weather insurance /Rainfallinsurance “An insured’s perspective” Feedback from a project …. Dr B S Suran, General Manager, NABARD
  2. 2. Background : perspective and possiblebiases !! 2 partners – Sajjatha sangh & SEWA Marginal differences in products ------------------------------------------ Insured’s perspective or …. ??One season Anecdotal and not research based
  3. 3. The partner agencies- products agencies-SEWA Sajjatha SanghGeneric Crop specificDeficit & excess RF Deficit RFMultiple events- Excess Multiple event – consecutive dry days105 days 90 daysMarket – Buy I get one ~50 % subsidy – premium
  4. 4. sewaSajjatha sangh Palmer index : is a soil moisture algorithm calibrated for relatively homogeneous regions. ( scales)
  5. 5. Partner agencies- Kharif 2010 agencies-Particulars SEWA Sajjata SanghPolicies issued 6384 5227 acresFarmers covered 1775 4223Villages/Blocks 60 42 blocks of 13 districtsCrops Generic Cotton, Paddy, Maize and GroundnutPayout Average ` 78 Range of ` 13 to 2911NABARD ` 9.50/ ` 4.78 ` 83.79/ ` 13.06Sanction /release lakh lakh
  6. 6. SEWA Some Observations 2006 2007 2008 2009 2010company ICICI L IFFCO ICICI L AICI AICICrop any any any any anyPhases 3 1 1 3 5 1. Subsidy & low premiumDuration 110 92 90 143 117 facilitated enrollmentsaverage premi 202Sum assured 1485(14% ) 76 190 1000(8%1000(19% ) ) 150 1500(10%) 150 1500(10%) 2. More payouts – entices WI policy Coverage 3. NABARD subsidy ensured HH enhanced coverage levels Policies S 1775 4. Average pay out was Rs 78 … per policy 6384 5. 960 farmers out of 1775 received payouts 781 908 620 1081 1442 624 2006 2007 2008 2009 2010
  7. 7. MODEL AGRICULTURE INSURANCE VILLAGE:WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2010) TERM SHEETState GUJ Distrcit: Sabarkantha Tehsil: Meghraj Village: BhatkotaCrop: Cotton Reference Weather Station: Bhatkota Unit: PER HECTAREDEFICIT RAINFALL Rainy Day: A Day With Rainfall greater than 2.0 mm is considered as a rainy day . PHASE - I PHASE - II PHASE - III PHASE - IV PERIOD 1-Jul to 31-Jul 1-Aug to 31-Aug 1-Sep to 30-Sep 1-Oct to 15-Oct Cover Index Sum Of Rainfall on Rainy Days TRIGGER I (<) 100 mm 80 mm 40 mm 60 mm TRIGGER II (<) 50 mm 40 mm 20 mm 30 mm1 A. RAINFALL VOLUME EXIT 10 10 5 0 RATE I (Rs./ mm) 10 8 10 0 RATE II (Rs./ mm) 25.00 22.67 53.33 0.0 Max. Payout (Rs.) 1500 1000 1000 0 TOTAL PAYOUT (Rs.) 3500 RAINFALL DISTRIBUTION PERIOD 1-Jul to 31-Aug1 B. (Consecutive Dry TRIGGER DAYS (>=) 20 25 30 Days)(multiple Event) PAYOUT (Rs.) 800 1700 2500 TOTAL PAYOUT (Rs.) 2500 Note:Multiple event will be considered for final payout TOTAL SUM INSURED (Rs.) 6000 PREMIUM (Rs.) + ST 500
  8. 8. MODEL AGRICULTURE INSURANCE VILLAGE:WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2010) TERM SHEETState GUJ Distrcit: Sabarkantha Tehsil: Meghraj Village: BhatkotaCrop: Generic crop Reference Weather Station: Bhatkota Unit: PER AcreDEFICIT RAINFALL Rainy Day: A Day With Rainfall greater than 1.0 mm is considered as a rainy day . PHASE - I PHASE - II PHASE - III PHASE - IV PERIOD 21-Jun to 15-Jul 16-Jul to 15-Aug 16-Aug to 30-Sep 1-Oct to 15-Oct Cover Index Sum Of Rainfall on Rainy Days TRIGGER I (<) 60 mm 80 mm 50 mm 60 mm TRIGGER II (<) 30 mm 35 mm 25 mm 30 mm1 A. RAINFALL VOLUME EXIT 5 5 5 0 RATE I (Rs./ mm) 10 6 10 0 RATE II (Rs./ mm) 18.00 32.67 37.50 0.0 Max. Payout (Rs.) 750 1250 1000 0 TOTAL PAYOUT (Rs.) 3000 RAINFALL DISTRIBUTION PERIOD 1-Jul to 31-Aug1 B. (Consecutive Dry TRIGGER DAYS (>=) 20 25 30 Days)(multiple Event) PAYOUT (Rs.) 500 1000 1500 TOTAL PAYOUT (Rs.) 1500 Note:Multiple event will be considered for final payout PHASE - III PHASE - IV PERIOD 1-Sep to 31-Oct 1-Nov to 30-Sep 1-Oct to 31-Oct DAILY RAINFALL TRIGGER (>) 50 mm 150 mm 60 mmEXCESS RAINFALL (Multiple EXIT (mm) 100 mm 250 mm 120 mmevents) Payout (Rs. / mm) 10.00 0 0 Max. Payout 500 0 0 TOTAL PAYOUT (Rs.) 500 TOTAL SUM INSURED (Rs.) 5000
  9. 9. Model Village – Bhatkhota !!- Tribal community dominated- AWS in the village- Enrollment of all villagers- Actual enrollment : 124/ 130 HH-Volunteers for campaign-Wage labour insurance – Loss of wages- low RF-Weather/agro-advisory…as add-on !!-Village level daily weather data- In-season monitoring !!--------------------------------------------------------All landed farmers + With Irrgn facility- Seed production – all HH- Adoption not as a risk mitigation tool…- No knowledge of Insurance provider- Pest seen as a major risk- Made no distinction .- Crop / non Crop- Relationship with partner helped-Low premium attracts- Moneyback guarantee & “ AWS demo for weathermapping” did have positive effect
  10. 10. Poor understanding of rainfallinsurance mechanism and policydetails even among the adoptedA sub-optimal payout experience affects theFarmers propensity to purchase rainfallinsurance in the subsequent periods.85% reported the need for payoutsAvg. Payouts expected = Rs.6240(Khambha). Avg. Payouts Received = Rs 80!67 % believed the product providedoptimal cover….study of 2009 by IGIDR
  11. 11. Conclusions Awareness matters (FL): Educated & financially literate are significantly more likely to purchase rainfall insurance…… !! BUT Peer following seen: many farmers unaware, seem to join in because of peers – Tendency to join triggered / enticed by low levels of premium- subsidized by NABARD – However, adoption could be influenced through information campaigns – Installation of visible tracking mechanisms do influence decision making at the farmer level. – Use of community leaders / volunteers helps in better enrollment
  12. 12. Conclusions Traditional Marketing interventions may not work... it is no sell and go product. But, selling by known NGOs ..helps in adoption Marketing : Moneyback guarantee along with “demo” and “weather forecast” has a positive effect Crops grown & product availed …limited linkages . Communicating payouts transparently… ensures interest in the product. Post sales service e.g. disseminate likelihood of payouts…
  13. 13. Thank you for your time Contact : ahmedabad@nabard.org bs.suran@nabard.org

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