Expanding Weather Insurance to Horticulture

1
Expanding Weather Insurance to Horticulture

• Devising the product
• Devising the product our experience
• Selling to farmers- issues thrown up

2
Expanding Weather Insurance to Horticulture

• DEVISING THE PRODUCT
• Assumption Agro-climatic conditions affect the
  crop
• Need to identify the agro-climatic
  vulnerabilities of the proposed crop
• Involving clients agronomists in devising
  product specifications- farmers feedback
  critical

3
Expanding Weather Insurance to Horticulture

• DEVISING THE PRODUCT
• Parameters can be varied covering various phases
  of plant growth
• - Excessive rainfall
• - Deficient rainfall
• - Excessive temperature
• - Low temperature
• -pest congenial climatic conditions

4
Expanding Weather Insurance to Horticulture

• DEVISING THE PRODUCT
• Identifying the triggers correctly
• DO NOT CHANGE THE TRIGGERS IN ENSUING YEARS IF
  THERE WAS A LOSS
• -erodes credibility of all agencies
• - a proxy cover -therefore need to
  constantly evaluate success of product by random
  surveys of actual impact at farm level

5
Expanding Weather Insurance to Horticulture

• DEVISING THE PRODUCT- Our experience
• AIC very receptive
• Willing to meet farmers requirement
• Seek volume and geographical spread
• Very concerned about adverse selection
• Display flexibility even in non weather based
  products
• Concerns remain same which affects ability to
  improve product and lower prices

6
Expanding Weather Insurance to Horticulture

• DEVISING THE PRODUCT- the farmers
  requirement
• Price
• Premium competing with input costs tendency to
  ride out the risk without insurance
• In percentage terms premium is very high- as high
  as 12 to 15 of the sum assured
• Insurers point of view- so are the risks and
  claims

7
Expanding Weather Insurance to Horticulture

• Selling to farmers issues thrown up
• Farming a gamble
• Proxy cover delinked from actual results
  accentuates the gamble therefore need to
• - involve them with weekly weather reports
• - today totally distanced with no
  involvement
• -No assurance that results are accurate
• - Need for more weather stations
• - Product features and price

8
Expanding Weather Insurance to Horticulture

• Selling to farmers issues thrown up
• Regulatory issues
• Cannot employ sub- brokers
• All sales employees must undergo 100 hours
  mandatory training
• Institutes in large towns and cities only
• Fees Rs 10-15 K per employee add living expenses
  and attrition

9
Expanding Weather Insurance to Horticulture

• Selling to farmers issues thrown up
• Issues not very different from New Pension
  Scheme
• Incentive to sell is low
• Income potential does not warrant initial expense
• Banks perhaps best suited to sell even to non-
  loanee farmers as part of fee based income
• Who fills in the gap on product features?
  Corporations involved in contract farming
  NGOs.

10
Expanding Weather Insurance to Horticulture

• THANK YOU