The weather insurance market in India is promising big things as pilot schemes for index-based weather insurance launch on a regular basis across the country. ICICI Lombard are no doubt the biggest player in this market right now and they’ve received approval from the government of Uttar Pradesh to provide weather based crop insurance to farmers in Jaunpur.
The scheme offers farmers the chance to cover a range of crops like Paddy, Maize, Jowar, Arhar, Seasum, Bajra and Urad to be covered for the Kharif 2010 harvest season. Premiums are subsidised for this microinsurance pilot and claims are to be settled according to actual weather date allowing for quick payouts to be made (vital in microinsurance schemes).
The pilot will provide cover for excess and deficit rainfall, temperature extremes and humidity changes.
ICICI Lombard’s weather insurance has now been adopted in 14 states of India and covers around 26 varieties of crops. In the 2009-10 season they covered 287,000 farmers which equated to 1,962,000 acres across 14 states.
Alok Agarwal, a director at ICICI Lombard, said “We consider it to be our privilege to have been chosen to provide weather based crop insurance in Uttar Pradesh. Agriculture is a significant contributor to the Indian economy accounting for 24% of the Indian GDP. The rural economy faces economic strain due to the variability in agriculture production and weather insurance protects the farmer against financial loss arising out of adverse weather conditions. ICICI Lombard believes in providing a fair and hassle-free service to its customers and the process has been made as objective as possible with third party government agencies monitoring the process.”
These products are proving so successful in India that we expect to see a wider rollout across the whole country once data is gathered and viability is tested.