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

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India: Land-holding Demographics

Description Size

Average Size (Ha.)

Total holdings (%)

Area (%)

Irrigated Area (%)

Marginal < 1 ha. 0.4 62 17 21 Small 1-2 ha. 1.42 19 19 20 Semi-Medium 2-4 ha. 2.73 12 24 24 Medium 4-10 ha. 5.84 6 25 24 Large >10 ha. 17.2 1 15 11 All 1.31 100 100 100

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India & Rainfall

Seasonal Distribution of Rains in India

No. Season Months Rainfall Quantum 1 Pre-Monsoon March - May 10.4% 2 South West Monsoon June - September 73.4% 3 North East Monsoon October - December 13.3% 4 Winter Rains January - February 2.9%

Source: India Meteorological Department (IMD)

Cropped Area Under Various Ranges of Rainfall in India

No. Rainfall Ranges Classification Cropped Area 1 < 750 millimeters (mm) Low Rainfall 33% 2 750 mm - 1125 mm Medium Rainfall 35% 3 1125 mm – 2000 mm High Rainfall 24% 4 > 2000 mm Very High Rainfall 8%

Source: Ministry of Agriculture (Government of India)

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Product Design Complexity

Inadequate Weather Station Density

Data Calibration

Scope limited to Parametric Weather

Climate Change & Seasonal Forecasts

Weather Cycles

Weather Insurance - Challenges

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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 ParametersWeather Indexed Parameters

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 featuresWBCIS features 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 contd….WBCIS features 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

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State: MADHYA PRADESH Distrcit: SATNA Block: SATNA

Crop: PADDY Reference Weather Station: Backup Weather Station:

1. DEFICIT RAINFALL

PERIOD 15-Jun to 15-Jul 16-Jul to 25-Aug 26-Aug to 25-Sep 26-Sep to 15-OctTRIGGER II (<) 100 mm 160 mm 100 mm 40 mmEXIT 0 0 0 0RATE II (Rs./ mm) 20 25 30 75Max. Payout (Rs.) 2000 4000 3000 3000

TOTAL PAYOUT (Rs.) 12000

2. PERIOD 15-Jun to 15-Jul 16-Jul to 25-Aug 26-Aug to 30-Sep 1-Oct to 30-OctDAILY RAINFALL TRIGGER (>) 80 mm 125 mm 100 mm 50 mmEXIT (mm) 180 mm 225 mm 200 mm 150 mmPayout (Rs. / mm) 10 5 5 10Max. Payout 1000 500 500 1000

TOTAL PAYOUT (Rs.) 3000

TOTAL SUM INSURED (Rs.) 15000PREMIUM (Rs.) 1500PREMIUM % 10.00%

Note: Franchise of 3.3% of the sum insured shall be apllicable, i.e., total claims of less than Rs.500 shall not be paid.

PHASE - I PHASE - II PHASE - III PHASE - IV

EXCESS RAINFALL (Multiple events)

1 A. RAINFALL VOLUME

WEATHER BASED CROP INSURANCE SCHEME (KHARIF 2008)TERM SHEET

PHASE - I PHASE - II PHASE - III PHASE - IV

WBCIS: Kharif 2008: Paddy - Satna

Rabi 2007-08: Weather Insurance

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COVER 1: Heat or Rise in Mean Temperature

Cover Objective: To cover anticipated yield loss due to rise in atmospheric temperatureCover period : 1st January to 31st March

Karnal (Haryana) – Normal Sowing period

Period (Fortnight) Jan-1st FN

Jan-2nd FN Feb-1st FN

Feb-2nd FN

Mar-1st FN Mar-2nd FN

Trigger Temp. (°C) 12.63 13.37 14.04 15.19 18.07 21.20

Rise in Mean temp (°C) Payout (Percentage of Sum Insured)

1.0 0.29 0.00 0.72 1.52 2.18 1.64

2.0 0.51 1.22 3.83 4.00 4.83 3.84

3.0 0.52 2.82 7.17 5.84 7.32 6.09

4.0 0.55 4.17 9.60 8.45 10.47 7.49

5.0 0.71 7.87 12.80 9.74 14.07 9.19

6.0 2.07 10.58 14.73 12.56 17.74 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…)

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COVER 2: Un-seasonal / Excess RainfallCover 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) Jan-1st FN Jan-2nd FN Feb-1st FN Feb-2nd FN Mar-1st FN Mar-2nd FN

Daily Rainfall (mm) Payout (Percentage of Sum Insured)

10.0 0.0 0.0 0.0 0.0 0.0 0.0

20.0 0.0 0.0 7.0 5.0 3.0 3.0

30.0 0.0 0.0 15.0 10.0 5.0 5.0

40.0 0.0 0.0 20.0 12.0 7.0 6.0

50.0 0.0 0.0 25.0 15.0 10.0 7.0

60.0 0.0 0.0 30.0 20.0 10.0 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: FrostCover Objective : To cover anticipated yield loss in the event of frost

Cover period : 1st December to 31st January Event Definition : Temperature of 1°C or below consecutively for 3 or more number of days

Event Duration (no. of days) 3 4 5

Payout (% of Sum Insured) 10 15 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 Phase-II

Phase-III

Rainfall Volume

Period/Phase

16-Jul to 31-Jul

01-Aug to 15-Aug

16-Aug to 31-Aug

STRIKE I (<)

35 mm 50 mm 60 mm

STRIKE II (<) 10 mm 20 mm 20 mm

EXIT 0 mm 0 mm 0 mm

RATE I (Rs/mm) 20.00 20.00 15.00

RATE II (Rs/mm) 100.00 57.50 45.00

MAXIMUM PAYOUT (`)

1500 1750 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 day’s cumulative rainfall in respective Phases.

• Illustration: Consider an example

• Cover Period: 01-July to 15-August.

• Crop: Paddy Phase-I Phase-II Phase-III

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.

Excess Rainfall(Multiple Payouts)

Period/Phase

01-Jul to 15-Jul 16-Jul to 31-Jul 01-Aug to 15-Aug

STRIKE (>) 90 mm 110 mm 125 mmEXIT 190 mm 250 mm 250 mmRATE (Rs/mm) 7.50 7.14 10.00

MAXIMUM PAYOUT (Rs)

750 1000 1250

Total Maximum Payout (Rs) 3000

WBCIS: Performance

SeasonSUM-INSURED PREMIUM CLAIMS Ratio %

Kharif 2007 5301.00 703.08 524.12 74.55Kharif 2008 31313.05 3168.04 1439.83 45.45Kharif 2009 198930.99 19902.79 15314.67 76.95Kharif 2010 443617.74 46057.52 15009.02 32.59Kharif 2011 834181.40 83701.81 35395.57 42.29Kharif 2012 723930.83 72640.33 47303.56 65.12Rabi 2007-08 170495.11 13845.15 9891.70 71.45Rabi 2008-09 42244.20 3559.55 2610.97 73.35Rabi 2009-10 197636.40 16076.43 13790.07 85.78Rabi 2010-11 524668.32 42756.08 28888.11 67.56Rabi 2011-12 669468.05 55741.28 58070.73 104.18

Overall 3841787.09 358152.06 228238.33 63.73

Lakh Rs.

States & Districts : Kharif 2013 (notified so far)

State Districts Crops

Andhra Pradesh Kurnool, Kadapa, Anantapur, Chitoor, Adilabad, Warangal, Khammam, Karimnagar, Guntur, West Godavari & Nalgonda

Groundnut, Cotton, Red Chilly, Sweetlime, Oilpalm & Tomato

Bihar Supaul, Saran, Munger, Lakhisarai, Kaimur (Bhabhua), Jahanabad, Jamui, Gaya, Begusarai, West Champaran & Nawada

Paddy, Maize

Haryana Kurukshetra (Shahbad, Babain & Pehwa blocks) & Jhajjar Beri & Salahwas)

Paddy

States & Districts : Kharif 2013 (notified so far)

State Districts

Jharkhand Latehar, Koderma, Giridih, Godda, Devdhar, Jamtara, Pakud, Sahebganj, Gumla, Palamu & Chatra

Paddy & Maize

West Bengal Jalpaiguri, Coochbehar, North 24 Parganas, South 24 Parganas & Birbhum – NL of all distts

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

Rajasthan Ajmer, Bikaner, Churu, Jaipur, Banswara, Bharatpur, Bhilwara, Bundi, Jaisalmer, Baran, Sriganganagar & Udaipur

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

Uttarakhand Pithoragarh, Bageshwar, Champawat, Dehradun, Tihri Garhwal, Pauri Garhwal & Rudra Prayag

Tomato, Ginger & Potato

Uttar Pradesh Faizabad Paddy, Maize, Bajra, Redgram, Blackgram, Sesamum & Groundnut

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19

• 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

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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20

21

Crop Insurance : Potential

(Acreage)

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

agenciesTrust that takes care of Today & TomorrowTrust that takes care of Today & Tomorrow

22

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