HDFC Ergo General Insurance in India have announced that they have made their first payments under their weather-index insurance programme due to heavy rainfall in the Dewas district of India. The index based weather microinsurance coverage was offered for this first time in 2011 to protect soybean farmers from heavy rainfall.
Payments made to farmers amounted to Rs. 1000 per acre, while the initial premiums paid were between Rs. 265 and 352 per acre. The policies covered both excess rainfall and also deficits of rainfall so farmers stood to win whether it was dry or overly wet, while no claims would have been paid for a good growing season.
HDFC Ergo plan to scale up the project to provide index insurance to many more farmers in the region and cite this as a good example of the benefits of weather-index insurance for rural farmers in India.
Weather index insurance is proving to be an accurate way of compensating farmers for loss of earnings due to inclement weather and we expect to see the use of these index based insurance products grow, particularly in developing countries.