Public listed Insurance Company, Agriculture Insurance Company of India Limited has announced the launch of its ‘Parametric Insurance’ scheme to protect crops against weather vagaries.
In a statement issued, the Agriculture Insurance Company of India said, “It aims to cover all Indian corporates and affinity groups and/or individuals owning establishments or businesses, income of which can be affected by variation in crop yields due to adverse weather conditions.”
The insurance program entails tracking of various weather and crop parameters through automated weather stations and based on these parameters a crop-specific index is derived and the most suitable insurance product is created for a specific crop.
AIC has worked to gather the data with multiple credible weather data agencies like IMD, Skymet Weather, and private/government vendor/agency that have automatic weather stations installed in various locations PAN India.
“The adverse weather conditions indicated by direct proxy weather indicators are the trigger events for this insurance cover. The pay-outs are made when the weather index deviation exceeds a predetermined threshold which is detrimental to crop growth. For example, rainfall parameters are deficit rainfall cover, excess rainfall cover, unseasonal rainfall cover, cover for inadequate distribution of rainfall, cover for wet spells, and more,” the statement added.
The company piloted the product with a leading warehousing company which is an agribusiness value chain integrator from India, focusing on catalyzing the ecosystem for smallholder farmers and FPOs through post-harvest interventions that include storage solutions, credit and risk guarantees, financial and market linkages, and policy level changes.
Agriculture Insurance company has covered 281 warehouses under this product in the current season located in various states like Bihar, Madhya Pradesh, Maharashtra & Rajasthan.
Speaking on the development, Siddesh Ramasubramanian, Appointed Actuary & Chief Risk Officer of Agriculture Insurance Company said, “Crop yield volatility is a huge risk in India as the Indian agriculture is majorly monsoon dependent. Due to the adverse weather in Maharashtra, there was crop loss which led to consequential losses for the warehouse owners. There was a claim of 6.77 lakh against the premium of 4.64 lakh i.e., claim ratio of 145%.”
“52% of Indian agriculture is rainfed, parametric insurance can be a great value add in protecting crops and the stakeholders against weather vagaries and its impact,” He added.
The insurance is customizable based on the crop season and crop type. Due to technology intervention, the claim settlement processes are faster, efficient & transparent with no subjectivity.