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This is a brief result of a pilot project on rainfall ( weather insurance) in Gujarat . Financially supported by NABARD. The objective is to assess the acceptability of the product by the farming community , so as to convince the State Govt to support the initiative. Presently the State Govt only supports the normal NAIS- normal crop insurance scheme
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/Rainfall /Rainfall insuranceinsurance
Weather insurance
“An insured’s perspective”
Feedback from a project ….
Dr B S Suran, General Manager, NABARD
2 partners – Sajjatha sangh & SEWA
Marginal differences in products
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Background : perspective and possible Background : perspective and possible biases !!biases !!
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Insured’s perspective or …. ??
One season
Anecdotal and not research based
The partner agenciesThe partner agencies-- productsproducts
SEWA Sajjatha Sangh
Generic Crop specific
Deficit & excess RF Deficit RFDeficit & excess RF Deficit RF
Multiple events- Excess Multiple event –consecutive dry days
105 days 90 days
Market – Buy I get one ~50 % subsidy –premium
Palmer index : is a soil moisture algorithm calibrated for relatively homogeneous regions. ( scales)
Sajjatha sangh
sewa
Particulars SEWA Sajjata SanghPolicies issued 6384 5227 acresFarmers covered 1775 4223
Villages/Blocks 60 42 blocks of 13 districts
Partner agenciesPartner agencies-- Kharif 2010Kharif 2010
districts
Crops Generic Cotton, Paddy, Maize and Groundnut
Payout Average ` 78 Range of ` 13 to 2911
NABARD
Sanction /release` 9.50/ ` 4.78 lakh
` 83.79/ ` 13.06 lakh
SEWA
2006 2007 2008 2009 2010company ICICI L IFFCO ICICI L AICI AICICrop any any any any any Phases 3 1 1 3 5Duration 110 92 90 143 117average premi 202 76 190 150 150Sum assured1485(14%)1000(8%)1000(19%)1500(10%)1500(10%)
1. Subsidy & low premium facilitated enrollments
2. More payouts – entices 3. NABARD subsidy ensured
Some ObservationsSome Observations
WI policy Coverage
1442
6384
1081908
624
781620
1775
2006 2007 2008 2009 2010
HH
Policies S
3. NABARD subsidy ensured enhanced coverage levels
4. Average pay out was Rs 78 … per policy
5. 960 farmers out of 1775 received payouts
State GUJ Distrcit: Sabarkantha Tehsil: Meghraj Village: Bhatkota
Crop: Cotton Reference Weather Station: Bhatkota
DEFICIT RAINFALL
Rainy Day: A Day With Rainfall greater than 2.0 mm is considered as a rainy day .
PERIOD 1-Jul to 31-Jul 1-Aug to 31-Aug 1-Sep to 30-Sep 1-Oct to 15-OctCover IndexTRIGGER I (<) 100 mm 80 mm 40 mm 60 mmTRIGGER II (<) 50 mm 40 mm 20 mm 30 mmEXIT 10 10 5 0
MODEL AGRICULTURE INSURANCE VILLAGE:WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2010)
TERM SHEET
Unit: PER HECTARE
PHASE - I PHASE - II PHASE - III PHASE - IV
Sum Of Rainfall on Rainy Days
1 A. RAINFALL VOLUME
RATE I (Rs./ mm) 10 8 10 0RATE II (Rs./ mm) 25.00 22.67 53.33 0.0Max. Payout (Rs.) 1500 1000 1000 0
TOTAL PAYOUT (Rs.) 3500
PERIOD 1-Jul to 31-AugTRIGGER DAYS (>=) 20 25 30
PAYOUT (Rs.) 800 1700 2500
TOTAL PAYOUT (Rs.) 2500
Note:Multiple event will be considered for final payout
TOTAL SUM INSURED (Rs.) 6000PREMIUM (Rs.) + ST 500
1 B.RAINFALL DISTRIBUTION (Consecutive Dry Days)(multiple Event)
State GUJ Distrcit: Sabarkantha Tehsil: Meghraj Village: Bhatkota
Crop: Generic crop Reference Weather Station: Bhatkota
DEFICIT RAINFALL
Rainy Day: A Day With Rainfall greater than 1.0 mm is considered as a rainy day .
PERIOD 21-Jun to 15-Jul 16-Jul to 15-Aug 16-Aug to 30-Sep 1-Oct to 15-OctCover IndexTRIGGER I (<) 60 mm 80 mm 50 mm 60 mmTRIGGER II (<) 30 mm 35 mm 25 mm 30 mmEXIT 5 5 5 0RATE I (Rs./ mm) 10 6 10 0RATE II (Rs./ mm) 18.00 32.67 37.50 0.0Max. Payout (Rs.) 750 1250 1000 0
MODEL AGRICULTURE INSURANCE VILLAGE:WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2010)TERM SHEET
Unit: PER Acre
PHASE - IV
1 A. RAINFALL VOLUME
Sum Of Rainfall on Rainy Days
PHASE - I PHASE - II PHASE - III
TOTAL PAYOUT (Rs.) 3000
PERIOD 1-Jul to 31-AugTRIGGER DAYS (>=) 20 25 30
PAYOUT (Rs.) 500 1000 1500
TOTAL PAYOUT (Rs.) 1500
Note:Multiple event will be considered for final payout
PERIOD 1-Sep to 31-Oct 1-Nov to 30-Sep 1-Oct to 31-OctDAILY RAINFALL TRIGGER (>) 50 mm 150 mm 60 mmEXIT (mm) 100 mm 250 mm 120 mmPayout (Rs. / mm) 10.00 0 0Max. Payout 500 0 0
TOTAL PAYOUT (Rs.) 500
TOTAL SUM INSURED (Rs.) 5000
EXCESS RAINFALL (Multiple events)
1 B.RAINFALL DISTRIBUTION (Consecutive Dry Days)(multiple Event)
PHASE - IVPHASE - III
Model Village Model Village –– Bhatkhota !!Bhatkhota !!- Tribal community dominated - AWS in the village- Enrollment of all villagers - Actual enrollment : 124/ 130 HH-Volunteers for campaign -Wage labour insurance – Loss of wages- low RF -Weather/agro-advisory…as add-on !!-Village level daily weather data - In-season monitoring !! --------------------------------------------------------All landed farmers + With Irrgn facility - Seed production – all HH - Adoption not as a risk mitigation tool…- No knowledge of Insurance provider- Pest seen as a major risk - Made no distinction .- Crop / non Crop- Relationship with partner helped-Low premium attracts - Moneyback guarantee & “ AWS demo for weather mapping” did have positive effect
Poor understanding of rainfall insurance mechanism and policy details even among the adopted
A sub-optimal payout experience affects the Farmers propensity to purchase rainfall insurance in the subsequent periods.
85% reported the need for payouts
Avg. Payouts expected = Rs.6240 (Khambha).
Avg. Payouts Received = Rs 80!
67 % believed the product provided optimal cover….study of 2009 by IGIDR
Conclusions Conclusions
Awareness matters (FL): Educated & financiallyliterate are significantly more likely to purchase rainfallinsurance…… !! BUTBUT
Peer following seen: many farmers unaware, seem toPeer following seen: many farmers unaware, seem tojoin in because of peers– Tendency to join triggered / enticed by low levels of
premium- subsidized by NABARD– However, adoption could be influenced through information
campaigns– Installation of visible tracking mechanisms do influence
decision making at the farmer level.– Use of community leaders / volunteers helps in better
enrollment
Traditional Marketing interventions may not work... it is no sell and go product.
But, selling by known NGOs ..helps in adoption
Conclusions Conclusions
Marketing : Moneyback guarantee along with“demo” and “weather forecast” has a positive effect
Crops grown & product availed …limited linkages .
Communicating payouts transparently… ensures interest in the product. Post sales service e.g. disseminate likelihood of payouts…
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