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Vinson Kurian

Thiruvananthapuram , Feb. 8

INTERNATIONAL Finance Corporation (IFC), the private sector arm of World Bank, is considering the option of working on new weather insurance products with some of the insurance providers in India.

Industry sources said the IFC has invested $10 million (around Rs 44 crore) in a weather risk management project aimed at introducing weather hedges in emerging markets. A key goal is to improve the economic stability of weather-sensitive private sector enterprises in developing countries.

The IFC has joined with Aquila Inc, a risk management service provider, to create the $80-million Global Weather Risk Facility (GWRF). The partnerships being proposed in India will be part of the GWRF initiative that seeks to introduce weather risk transactions in emerging markets. The IFC initiative with sunflower farming in Morocco has met with considerable success.

According to Mr Shashwat Sharma, who heads rural insurance at HDFC Chubb General Insurance, risk transfer and risk sharing mechanism are available for weather insurance products through global reinsurance and/or derivative markets. The only caveat is that there have to be defined and objective parameters and that the collection process for defining the index (for claims settlement) has to be foolproof.

For instance, the entertainment industry is dependent on the vagaries of weather that may considerably delay some film/TV projects or cause disturbance of certain organised events. The market for such a cover is still evolving. Mumbai and Chennai may present a market for the same.

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