igidr-ifpri - innovative crop insurance scheme, k. n. rao, aon benfield
DESCRIPTION
Indira Gandhi Institute for Development Studies(IGIDR), and the International Food Policy Research Institute (IFPRI) on ‘Harnessing Opportunities to Improve Agri-Food Systems’ on July 24-25 , 2014 in New Delhi. The two day conference aims to discuss the agricultural priority of the government and develop a road map to realise these priorities for improved agri food systems.TRANSCRIPT
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Innovative Crop Insurance
Program
Kolli N Rao
July 2014
1
World Crop Market-2012Capabilities – Agriculture Speciality
Worldwide agriculture insurance premium has quadrupled since the beginning of the century
Asia accounts for over 28% of the Total Premium and will continue to grow
Rest of World71.0%
APAC29.0%
Worldwide Premium - USD 23b
China64.0%
Japan18.9%
India12.4%
Korea3.0%
AU & NZ1.7%
APAC Premium - USD 6.7b
2
Indian Crop MarketCapabilities – Agriculture Speciality
-
5,000
10,000
15,000
20,000
25,000
30,000
2005/6 2006/7 2007/8 2008/9 2009/10 2010/11 2011/12 2012/13 2013/14(Est.)
INR
Mill
ion
s
Year
NAIS MNAIS WBCIS
Value:
Fair and Timely settlement of
claims
Insurance: Expectation
Farmers
Adequate risk
coverage
Comprehensive risk
protection
Affordable premium
Fair and transparent
loss assessment
Prompt claim
settlement
Quick grievance
redressal
Insurance: Expectation
Farmers
Adequate risk
coverage
Comprehensive risk
protection
Affordable premium
Fair and transparent
loss assessment
Prompt claim
settlement
Quick grievance
redressal
Government
Protecting farmers
Food security
Close ended fiscal
exposure
Free from ad-hoc
assistance
Meshes with other risk
mitigation measures
Sustainable
Insurance: Expectation
Farmers
Adequate risk
coverage
Comprehensive risk
protection
Affordable premium
Fair and transparent
loss assessment
Prompt claim
settlement
Quick grievance
redressal
Government
Protecting farmers
Food security
Close ended fiscal
exposure
Free from ad-hoc
assistance
Meshes with other risk
mitigation measures
Sustainable
Insurance industry
Viable (Critical numbers,
spread, control)
Stability and
consistency in policies
Operating expenses
under control
Business proposition
Insurance: Expectation
Innovation: Scope
Product
A: Production Risk
B: Income Risk
A: Production Risk
1. Index (Yield,
Weather, Crop health)
2. Traditional
3. Index Plus
4. Double Trigger
Insurance Innovation
Product
Production Risk
Income Risk
Production Risk
Index (Yield, Weather,
Crop health)
Traditional
Index Plus
Double Trigger
Distribution
Banks
Agents
Micro Agents
Brokers
Direct
Online
Insurance Innovation
Product
Production Risk
Income Risk
Production Risk
Index (Yield, Weather,
Crop health)
Traditional
Index Plus
Double Trigger
Distribution
Banks
Agents
Micro Agents
Brokers
Direct
Online
Insurance Innovation
Financing Ways
(1)Claims subsidies
(2)Premium subsidies
(1) or (2) +
infrastructure support
/ extreme losses
Product
Production Risk
Income Risk
Production Risk
Index (Yield, Weather,
Crop health)
Traditional
Index Plus
Double Trigger
DistributionBanks
Agents
Micro Agents
Brokers
Direct
Online
Loss Assessment
Area Yield estimation
(sub-district/GP)
Weather data (~15 Km
radius)
Individual farm
assessment
Weather data (part1)+
individual farm (part2)
Insurance Innovation
Financing Ways(1)Claims subsidies
(2)Premium subsidies
(1) or (2) + infrastructure
support / extreme
losses
Product
Production Risk
Income Risk
Production Risk
Index (Yield, Weather,
Crop health)
Traditional
Index Plus
Double Trigger
DistributionBanks
Agents
Micro Agents
Brokers
Direct
Online Loss Assessment
Area Yield estimation (sub-
district/GP)
Weather data (~15 Km
radius)
Individual farm
assessment
Weather data (part1)+
individual farm (part2)
Insurance Innovation
Financing Ways(1)Claims subsidies
(2)Premium subsidies
(1) or (2) + infrastructure
support / extreme
losses
Time for Settlement
of claims
Yield: 6-9 months
Weather: 2-4
months
Farm: 1-2 months
Innovation: Going Forward
Going Forward
Backing & support
Agri-risk Protection Act (inter-connections, protocol, fund
availability)
Technical control and hand-holding
Target Protection & Financing
Double-layered product target: catastrophe layer (mandatory
and largely free) + commercial layer infrequent risks (with
smaller subsidy)
Product bouquet
Double trigger product
Index Plus / Community based
Revenue
Use of ICT to control moral hazard, as also to enhance the
value of insurance
Going Forward
Data (yield, weather, price, insurance data)
Weather infrastructure, secondary data
Down-scaling of yield data with RST
Price data
Nationally Consistent Database
Insurance Education
Awareness
Capacity building
Insurance Agency Model
Competition – Product, rate & services (existing)
Centralized – (standard product features, prices) service
Insurance pool
Reinsurance pool
17
Aon Benfield Asia
80 Raffles Place
#42-01 UOB Plaza
Singapore 048624
tel: +65 6535 6511
fax: +65 6532 2977
www.aonbenfield.com
Contact
Kolli N Rao
[email protected]+91 22 24180699
+91 9167323795