India - Crop Insurance Non-Lending Technical Assistance : Summary of Policy Suggestions
At the request of Government of India (GOI), the World Bank has provided technical assistance to the public insurance company, Agriculture Insurance Company of India (AICI) to develop an actuarially sound rating methodology and improve the contract...
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| Format: | Other Agricultural Study |
| Language: | English |
| Published: |
World Bank
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000386194_20110503030736 http://hdl.handle.net/10986/2749 |
| Summary: | At the request of Government of India
(GOI), the World Bank has provided technical assistance to
the public insurance company, Agriculture Insurance Company
of India (AICI) to develop an actuarially sound rating
methodology and improve the contract design of the
area-yield based National Agriculture Insurance Scheme
(NAIS) to reduce delays in claim settlement; to design and
ratemaking of new weather index insurance products under the
weather based crop insurance scheme; and to perform a risk
assessment of AICI's insurance portfolio and to suggest
cost-effective risk financing solutions (including
reinsurance). Crop insurance can contribute to increasing
access to rural finance and is required to ensure a more
viable agriculture credit business. An improved crop
insurance program supports and complements other critical
agriculture sector related measures, including the reform of
rural credit cooperatives, agriculture marketing reforms and
efforts to improve agriculture extension and productivity. A
better understanding of risks entailed in particular crops
in particular areas which can be ascertained through
assessing the actuarially sound insurance premium rates for
the crop can also be a significant input to agriculture
policy at sub-national and national levels. Similarly, crop
insurance is vital for creditors, such as banks and rural
cooperatives, which otherwise face significant risks in
agriculture lending that are otherwise difficult to price
given political economy factors and the underlying fragile
economics of agriculture. The inherent risks in agriculture
in India with its high degree of dependence on rain-fed
cultivation, a well developed and widely used agriculture
insurance program is critical from a farmer perspective.
Without this, farmers run the risk of crop failures, which
in turn, lead to inability to service their debts. Since
crop cycles often follow seamlessly from one season to the
next, delinquency on account of one crop could mean being
ruled out of the formal banking system for the next crop cycle. |
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