The increasing adoption of weather index insurance or parametric insurance in the developing world continues as another pilot scheme gets approval in the Indian state of Maharashtra. Insurer HDFC ERGO General Insurance has received approval from the Maharashtra government to implement a pilot microinsurance project aimed at both farmers who have taken loans from a financial institution and those who have not.
Many weather index insurance schemes only target farmers who have some sort of economic debt to a financial institution or to a supplier, so it is encouraging to see them being offered more openly to farmers who simply need a source of protection for their crops from the weather. Thos who have taken loans will be automatically insured as part of their loan repayments.
Crops which will be eligible for insurance cover through the pilot project include; Grapes in Sangli, Satara and Beed districts, Pomegranate in Buldhana, Aurangabad, Satara, Beed and Sangli districts, Banana in Akola, Buldhana, Aurangabad, Satara, Kolhapur, Parbhani , Beed and Sangli, Orange in Akola and Buldhana, Sweet Lime in Buldhana, Aurangabad, Parbhani and Beed, Guava in Buldhana and Aurangabad and Cashew in Kohlapur.
As with other similar pilots, the cover is designed to help farmers recover after weather extremes damage their crops. Payouts are based on actual recorded weather conditions using data from reference weather stations which are operated by a third-party. The pilot will cover weather parameters such as rainfall, drought, frost and humidity. It’s worth noting that some pilot schemes cover both excess and deficiency in rainfall amounts while others only cover deficiency, we’re unsure which the HDFC Ergo scheme includes.
In total, HDFC Ergo has now insured upwards of 1.3 million farmers across 8 states in various weather index insurance trials.