Farmers like to select their insurance cover
The experience of Weather Risk Management Services (WRMS) suggests that modular products that offer farmers a choice of risks covered and inception dates might stimulate demand for weather-index insurance products.
In 2010, WRMS in India designed a weather-index insurance product for potato and paddy farmers in two remote districts of West Bengal and Assam. The product allowed farmers to choose protection against various perils, including excess rainfall, temperature, and water deficit.
Given a choice, most farmers selected insurance for a single risk that they perceived as the most relevant. For example, in the Howra district of West Bengal, of 813 farmers who bought the product, 488 chose to cover one risk, 255 chose to cover two risks, and 70 chose to cover three risks. Collectively, 465 farmers chose insurance for rain, 417 farmers chose insurance for temperature, and 338 chose insurance for water deficit.
Farmers selected cover based on the season and the type of crops cultivated during that season. For example, in areas with frequent floods induced by heavy rainfall, paddy farmers preferred cover for excess rainfall during harvest. Potato farmers preferred to purchase insurance during winter (potato cultivation season), and when humidity and temperature conditions made the crops more susceptible to disease.
Farmers also preferred to select the inception date of the cover in order to align with their sowing plans.
To learn more about the product and WRMS, see WRMS' Learning Journey.
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