Iffco Tokio, the joint venture between the Indian Farmers Fertilizer Co-operative (IFFCO) and Japanese insurer Tokio Marine and Nichido Fire Group, is planning to launch a satellite based weather index for weather insurance use in India. The scheme is being worked on thanks to the help of a grant from the International Labour Organisation UN agency.
Iffco Tokio say the current sources of weather data for insurance from the India Meteorological Department is just not up to the job given the primitive technology involved and manual intervention, inadequate historical data and delays in reporting. They say a satellite based index of weather will factor in variables such as foliage imagery, soil types, moisture data as well as temperature variations. Iffco Tokio also plans to use cooperative institutions in rural areas to increase it’s points of sale and bring micro-insurance weather risk products to the population.
This should help to advance the already burgeoning Indian weather insurance market and will pave the way for a greater range of products beyond the simple micro-insurance products we see today. Data of this type could also be used to begin trade in weather derivatives as well as increasing the potential for other types of weather risk instruments.