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Radhika Menon

Mumbai, Feb. 18 As many as 10 lakh farmers are estimated to be covered under the weather insurance plan by end of the current rabi season.

The Agriculture Insurance Company (AIC) alone expects to cover over 5 lakh farmers and insure over 8 lakh hectares of crop for a sum of Rs 1,500 crore in the rabi season. The pilot insurance plan was announced by the Finance Minister in the last Budget.

This will be the largest number of farmers covered under weather insurance, given that insurance companies have so far only been able to cover a little over a lakh of farmers annually under other commercial weather insurance products.

The AIC and a few private insurers together expect to cover around 10 lakh farmers under the weather insurance plan by this rabi season, said insurance company officials.

The pilot, which is being run by AIC in Bihar, Chhattisgarh, Madhya Pradesh and Rajasthan, is a significant step as it offers farmers a substitute to the National Agriculture Insurance Scheme (NAIS) .

Claim payouts so far under the NAIS, the largest insurance scheme in the world (in terms of number of farmers at 1.7 crore), have seen long delays as they are based on yield data. The premium under NAIS has been based on a flat rate system while in the case of weather insurance it is derived on an actuarial basis. The premium under the weather insurance pilot is subsidised in the range of 30-75 per cent, depending on the crop.

Mr M. Parshad, Chairman and Managing Director, Agriculture Insurance Company, said that the most important feature of the customised weather insurance product for the pilot project is that the product definition will be at block or the tehsil level as compared to most of the products which are at the district level.

Weather data will also be used at block level using Automatic Weather Stations (AWS). Using block level data would improve the scientific accuracy of the product. The product has been further validated and fine-tuned in consultation with the agriculture department of the respective States. The company has already collected around Rs 125 crore in premium.

“The pilot covers 137 blocks in 22 districts and the major crops that have been covered include wheat, barley, gram, mustard, potato, cumin, coriander, fenugreek and isabgol. Weather indices are designed using weather parameters such as unseasonal rains, frost, heat and relative humidity,” Mr Parshad said.

Private companies such as ICICI Lombard and Iffco Tokio General Insurance are covering farmers in Maharashtra, Tamil Nadu, Andhra Pradesh, West Bengal and Jharkhand under the pilot.

More Stories on : General Insurance | Climate & Weather

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