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Non availability of past record of Yields, Land surveys, Ownership and Tenancy Large number of Farm-holdings (nearly 120

million) Small size of farm-holdings (Average size of 1.3 hectare) Inaccessibility of Farm-holdings Low value per unit Large variety of crops, varied agro-climatic conditions and package of practices Difficulty in collection of small amount of premium from large number of farmers Simultaneous harvesting of crops all over the country Prohibitive cost of Manpower and Infrastructure

India: Land-holding Demographics


Average Size (Ha.) 0.4 1.42 2.73 5.84 17.2 1.31

Description Marginal Small Semi-Medium Medium Large All

Size < 1 ha. 1-2 ha. 2-4 ha. 4-10 ha. >10 ha.

Total holdings (%) 62 19 12 6 1 100

Area (%) 17 19 24 25 15 100

Irrigated Area (%) 21 20 24 24 11 100

India & Rainfall


Seasonal Distribution of Rains in India
No. 1 2 3 4 Season Months Rainfall Quantum Pre-Monsoon March - May 10.4% South West Monsoon June - September 73.4% North East Monsoon October - December 13.3% Winter Rains January - February 2.9% Source: India Meteorological Department (IMD)

Cropped Area Under Various Ranges of Rainfall in India


No. 1 2 3 4 Rainfall Ranges Classification Cropped Area < 750 millimeters (mm) Low Rainfall 33% 750 mm - 1125 mm Medium Rainfall 35% 1125 mm 2000 mm High Rainfall 24% > 2000 mm Very High Rainfall 8% Source: Ministry of Agriculture (Government of India)

After Sales Service & Timely Payout

Quality & Up-todate Historical Weather data

Definite YieldWeather Relationship

Insurance Education & Marketing

Successful Weather Insurance Product

Product Benchmarking

Affordable Premium (Premium Subsidy)

Adequate Risk Coverage


Weather Equipment Standards

Minimizing Basis risk (Density of Weather Stations)

Weather Insurance - Challenges


Product Design Complexity Inadequate Weather Station Density

Data Calibration
Scope limited to Parametric Weather Climate Change & Seasonal Forecasts Weather Cycles

Weather Index Parameters


Rainfall: Deficit rainfall, Excess rainfall, Consecutive Dry/ Wet Days Temperature: Maximum Temperature (heat), Minimum Temperature (frost) Relative Humidity Wind Speed Disease proxy: Combination of rainfall, temperature & humidity

Weather Indexed Parameters


n

Rainfall: Deficit rainfall, Consecutive Dry


Days (CDD), Rainy Days, Excess rainfall, Consecutive Wet Days (CWD)

Temperature: Max. Temperature (heat),


Min. Temperature (frost), Mean Temperature, Hourly Chilling units

Relative Humidity Wind Speed

Disease proxy: Combination of rainfall,


temperature & humidity

WBCIS features
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Available to all States All crops can be covered All farmers can be covered Compulsory for loanee (sanctioned credit limit), optional for others Sum insured based on cost of cultivation, usually predefined. Not less than 50% of defined SI. Premium rates are actuarial (max. 10% for kharif, 8% for rabi for food crops; others 12%) Farmers pay premium at same rate as under NAIS (for Food crops i.e. 2.5 3.5% Kh; 1.5-2.0 Rb)), for others max. 6%. Subsidy upto 75%, (diff between actuarial & farmer premium) shared equally by Centre & State Parameters covered : rainfall, RH, temp, Wind speed, Sun shine hours Risk period : Sowing to harvesting

WBCIS features
n

contd.

Reference Weather Station: An AWS installed in the area to which the RUA shall be attached.

Reference Unit Area : Area attached to a RWS whose claims shall be settled on the basis of weather data recorded at the RWS.
Bach up weather Station : Claims solely on the basis of weather data recorded at RWS. Claims usually paid within 45 days from risk period subject to availability of subsidy by Government Claims fully borne by AIC ADD ON Cover for hailstorm & cloudburst Shimla (Apple) & Nasik (Grapes) Individual farm assessment

WBCIS: Kharif 2008: Paddy - Satna


State: MADHYA PRADESH Crop: PADDY 1. DEFICIT RAINFALL PERIOD TRIGGER II (<) EXIT RATE II (Rs./ mm) Max. Payout (Rs.) TOTAL PAYOUT (Rs.) PHASE - I 15-Jun to 15-Jul 100 mm 0 20 2000 12000 PHASE - I 15-Jun to 15-Jul 80 mm 180 mm 10 1000 3000 PHASE - II PHASE - III to 25-Aug 26-Aug to 30-Sep mm 100 mm mm 200 mm 5 500 PHASE - IV 1-Oct to 30-Oct 50 mm 150 mm 10 1000 PHASE - II 16-Jul to 25-Aug 160 mm 0 25 4000 PHASE - III 26-Aug to 25-Sep 100 mm 0 30 3000 PHASE - IV 26-Sep to 15-Oct 40 mm 0 75 3000 WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2008) TERM SHEET Distrcit: SATNA Reference Weather Station: Backup Weather Station: Block: SATNA

1 A. RAINFALL VOLUME

2. EXCESS RAINFALL (Multiple events)

PERIOD DAILY RAINFALL TRIGGER (>) EXIT (mm) Payout (Rs. / mm) Max. Payout TOTAL PAYOUT (Rs.)

16-Jul 125 225 5 500

Note: Franchise of

TOTAL SUM INSURED (Rs.) 15000 PREMIUM (Rs.) 1500 PREMIUM % 10.00% 3.3% of the sum insured shall be apllicable, i.e., total claims of less than Rs.500

shall not be paid.

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Rabi 2007-08: Weather Insurance


COVER 1: Heat or Rise in Mean Temperature Cover Objective: To cover anticipated yield loss due to rise in atmospheric temperature Cover period : 1st January to 31st March
Karnal (Haryana) Normal Sowing period Period (Fortnight) Trigger Temp. (C) Jan-1st FN 12.63 Jan-2nd FN 13.37 Feb-1st FN 14.04 Feb-2nd FN 15.19 Mar-1st FN 18.07 Mar-2nd FN 21.20

Rise in Mean temp (C)


1.0 2.0 3.0 4.0 5.0 6.0 0.29 0.51 0.52 0.55 0.71 2.07

Payout (Percentage of Sum Insured)


0.00 1.22 2.82 4.17 7.87 10.58 0.72 3.83 7.17 9.60 12.80 14.73 1.52 4.00 5.84 8.45 9.74 12.56 2.18 4.83 7.32 10.47 14.07 17.74 1.64 3.84 6.09 7.49 9.19 10.54

Note: Total payout under this cover shall be capped at INR 11,250 per hectare or INR 4,500 per Acre Continued in Next slide .

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Rabi 2007-08: Weather Insurance (contd)


COVER 2: Un-seasonal / Excess Rainfall Cover Objective: To cover anticipated yield loss due to excess/ un-seasonal rainfall Cover period: 1st February to 31st March
Karnal (Haryana) Normal Sowing period Period (Fortnight) Daily Rainfall (mm) 10.0 0.0 Jan-1st FN Jan-2nd FN Feb-1st FN Feb-2nd FN Mar-1st FN Mar-2nd FN

Payout (Percentage of Sum Insured) 0.0 0.0 0.0 0.0 0.0

20.0
30.0 40.0 50.0 60.0

0.0
0.0 0.0 0.0 0.0

0.0
0.0 0.0 0.0 0.0

7.0
15.0 20.0 25.0 30.0

5.0
10.0 12.0 15.0 20.0

3.0
5.0 7.0 10.0 10.0

3.0
5.0 6.0 7.0 10.0

Note: Total payout under this cover shall be capped at INR 6,750 per hectare or INR 2,700 per Acre -----------------------------------------------------------------------------------------------------------------------------------------------COVER 3: Frost Cover Objective : To cover anticipated yield loss in the event of frost Cover period : 1st December to 31st January Event Definition : Temperature of 1C or below consecutively for 3 or more number of days Event Duration (no. of days) Payout (% of Sum Insured)

3 10

4 15

5 20

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Product Illustration
Definition: Aggregate of rainfall over Period/Phase Illustration: Consider an example Cover Period: 16-July to 31-August Crop: Paddy

Phase-I
16-Jul to 31-Jul

Phase-II
01-Aug to 15Aug 50 mm 20 mm

Phase-III
16-Aug to 31Aug 60 mm 20 mm

Period/Phase STRIKE I (<)

35 mm 10 mm

Rainfall Volume

STRIKE II (<) EXIT RATE I (Rs/mm) RATE II (Rs/mm) MAXIMUM PAYOUT (`)

mm

0 mm
20.00 57.50 1750

mm

20.00 100.00 1500

15.00 45.00 1500

Total Maximum Payout (Rs)

4750.00

If, aggregate rainfall during Phase-I = 08 mm. A payout will trigger as 8 mm is less than strike-I as well as strike-II of phase-I The payout would be : (10 - 8) X 100 + (35 - 10) X 20 i.e. Rs 700.00. If, aggregate rainfall during Phase-II is 30 mm. A payout will trigger because 30 mm is less than strike-I of the phase-II The payout would be (50 - 30) X 20 i.e. Rs 400.00.

Product Illustration
Definition: Maximum of 2 consecutive days cumulative rainfall in respective Phases. Illustration: Consider an example Cover Period: 01-July to 15-August.

Crop: Paddy
Period/Phase

Phase-I
01-Jul to 15-Jul

Phase-II
16-Jul to 31-Jul 110 mm 250 mm 7.14 1000

Phase-III
01-Aug to 15Aug 125 mm 250 mm 10.00 1250

Excess Rainfall (Multiple Payouts)

STRIKE (>) EXIT

RATE (Rs/mm) MAXIMUM PAYOUT (Rs)

90 mm 190 mm 7.50 750

Total Maximum Payout (Rs)

3000

If, in any 2 Consecutive days cumulative rainfall is 150 mm (85+65=150 mm), This is greater than Strike for the phase i.e. 90 mm. So, payout for this Phase will be calculated as (150 - 90) X 7.50 i.e. Rs 450.00. Similarly, in phase-II any 2 Consecutive days cumulative rainfall is 210 mm , This is greater than Strike for the phase. The payout for this Phase will be calculated as (210 - 110) X 7.14 i.e. Rs 714.00. In this way total payout under this cover will be Rs 450+714 which is equal to Rs 1164.00.

WBCIS: Performance
Lakh Rs. Season Kharif 2007 Kharif 2008 Kharif 2009 Kharif 2010 Kharif 2011 Kharif 2012 Rabi 2007-08 Rabi 2008-09 Rabi 2009-10 Rabi 2010-11 Rabi 2011-12 Overall SUMINSURED PREMIUM CLAIMS Ratio % 5301.00 703.08 524.12 74.55 31313.05 3168.04 1439.83 45.45 198930.99 19902.79 15314.67 76.95 443617.74 46057.52 15009.02 32.59 834181.40 83701.81 35395.57 42.29 723930.83 72640.33 47303.56 65.12 170495.11 13845.15 9891.70 71.45 42244.20 3559.55 2610.97 73.35 197636.40 16076.43 13790.07 85.78 524668.32 42756.08 28888.11 67.56 669468.05 55741.28 58070.73 104.18 3841787.09 358152.06 228238.33 63.73

States & Districts : Kharif 2013 (notified so far)


State Andhra Pradesh Districts Kurnool, Kadapa, Anantapur, Chitoor, Adilabad, Warangal, Khammam, Karimnagar, Guntur, West Godavari & Nalgonda Supaul, Saran, Munger, Lakhisarai, Kaimur (Bhabhua), Jahanabad, Jamui, Gaya, Begusarai, West Champaran & Nawada Kurukshetra (Shahbad, Babain & Pehwa blocks) & Jhajjar Beri & Salahwas) Crops Groundnut, Cotton, Red Chilly, Sweetlime, Oilpalm & Tomato

Bihar

Paddy, Maize

Haryana

Paddy

States & Districts : Kharif 2013 (notified so far)


State Jharkhand Districts Latehar, Koderma, Giridih, Godda, Devdhar, Jamtara, Pakud, Sahebganj, Gumla, Palamu & Chatra Jalpaiguri, Coochbehar, North 24 Parganas, South 24 Parganas & Birbhum NL of all distts Ajmer, Bikaner, Churu, Jaipur, Banswara, Bharatpur, Bhilwara, Bundi, Jaisalmer, Baran, Sriganganagar & Udaipur Paddy & Maize

West Bengal

Ladies finger, Chilly, cauliflower, Brinja, banana, Bitter gourd & other cucurbits, Marigild, Tomato, Tuberose, papaya, Betel leaf, guava & pineapple

Rajasthan

Bajra, Jowar, Maize, Greengram, Moth, Blackgram, Guar, Sesame, Castor, Groundnut & Cotton

Uttarakhand

Uttar Pradesh

Tomato, Ginger & Potato Pithoragarh, Bageshwar, Champawat, Dehradun, Tihri Garhwal, Pauri Garhwal & Rudra Prayag Paddy, Maize, Bajra, Faizabad Redgram, Blackgram,

Not a substitute for Area Yield Insurance, but a complementary Good crop husbandry practices & agro-meteorological adaptation could be the key for maximizing efficiency of Weather insurance contracts Most suited:

(i) for crops with no historical yield data;

- (iii) perennial crops (usually age-group wise yield estimates are unavailable) - (iv) for crops / areas facing problems of asymmetric information; - (ii) as an index to give an early payout under Area Yield Insurance; - (v) crops experiencing huge time trend in yields;

- (vi) macro index to decide calamity relief

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L/NL
Farmer type Farmers covered Premium Claim Farmers benefitted % of total

Loanee

20661104

342015

216695

11298857

95%

93%

Non Loanee

1069416

16137

11544

873802

5%

7%

Total

21730520

358152

228239

12172659
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Crop Insurance : Potential


(Acreage)

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Suggested target group


Advanced farmers leaders in adopting new innovations Village head Self Help groups Kisan clubs Women Working groups Local fairs / Kisan Melas Agriculture / Horticulture Officers Training camps org. by various agencies
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