Expanding Weather Insurance to
Horticulture
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Devising the product
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Devising the product – our experience
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Selling to farmers- issues thrown up
Expanding Weather Insurance to
Horticulture
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DEVISING THE PRODUCT
Assumption: Agro-climatic conditions affect the
crop
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Need to identify the agro-climatic
vulnerabilities of the proposed crop
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Involving clients’ agronomists in devising
product specifications- farmers’ feedback
critical
Expanding Weather Insurance to
Horticulture
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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
Expanding Weather Insurance to
Horticulture
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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
Expanding Weather Insurance to
Horticulture
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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
Expanding Weather Insurance to
Horticulture
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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
Expanding Weather Insurance to
Horticulture
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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
Expanding Weather Insurance to
Horticulture
Selling to farmers –issues thrown up
Regulatory issues
• Cannot employ sub- brokers
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All sales employees must undergo 100 hours
mandatory training
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Institutes in large towns and cities only
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Fees Rs 10-15 K per employee add living
expenses and attrition
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 ‘nonloanee’ farmers as part of fee based income
- Who fills in the gap on product features?
Corporations involved in contract farming &
NGOs.
Expanding Weather Insurance to
Horticulture
THANK YOU