As of Nov 2009
Fifty rain gauges were installed in collaboration with Spatika of Bangalore across five locations of Kamuthi, Sayalkudi, Singampunari, Kottampatti, and Thiruppulani. They were approximately five kilometers apart, depending upon host availability. The gauges were installed with proper cementing and protected from outside interference. The data is received on a GSM signal every 15 minutes at a central data receiving mechanism at DHAN, and consolidated daily. If there is a breakdown in signal connectivity, the data has to be manually checked at the recorder that is installed with the rain gauge. Data capture is regular and the quality of the data is good.
The federations prepared an inception document including background information about the federation area (geographic, demographic and agricultural information), risk and vulnerabilities of farmers, and design of crop mutual insurance.
Rainfall related risks were identified for paddy and chilies in consultation with the community through the MIC. Focus group discussions were conducted and the product was designed by People Mutuals with the support of Eureko Re.
DHAN trained staff and community leaders to conduct exposure visits to the federations where crop insurance had been implemented during the past period. As the index based crop insurance was new to farmers, staff wanted to make sure that farmers understood the product concepts and its relevance for their crop risks. Some training and farmer awareness material were developed in local languages.
It was decided to only distribute the insurance to members of the Federations.
As of February 2010
A reinsurance arrangement was put in place with Eureko Re with a 90/10 quota share.
The first round of the product distribution in November to December 2009 received a mixed response. Against a planned 776 hectares, 529 hectares of coverage was achieved, with a very low number of farmers participating in the programme. Only 748 farmers took the coverage against a target of 4,000 farmers. This shows that either the marginal farmers have not been reached, or they were not interested in the cover. Field staff (about four) and Federation leaders (around 15) were involved in promoted the product. Claims amounting to 10,500 Indian rupees (INR) were triggered for paddy crops in Singampunari block.
As of July 2010
Preparations were made for the next round of sales. Lessons learnt from the first round were incorporated in terms of increased community involvement in product design and customer awareness.
Field staff was trained on the risks and vulnerabilities of farmers, the meaning of insurance, the meaning of mutuality and working with MICs, and rainfall indexed insurance and automatic rain gauges. Exposure visits were organized to the locations served by the insurance.
Ten new locations were identified for extension of the programme and work was carried out to install rain gauges and conduct customer awareness. Overall, plans were made to cover 2,800 hectares of crops in the 15 project locations (1,200 hectares in the five locations of year one and 1,600 hectares in the ten locations of year two).
As of January 2011
A total of 150 rain gauges were installed in addition to DHAN’s earlier nine rain gauges (bringing the total to 159), which provide data for about 15 locations. A product was developed for 15 locations using inputs provided by the MICs and advice from the Agriculture Insurance Company (AIC), the government’s specialized agricultural insurance organization.
In a significant departure from the earlier round, the risk for all the locations was transferred to AIC instead of being retained in the community. The entire development, promotion, and implementation of the programme, however, were retained with DHAN. The decision to transfer the risk to AIC was taken because the community was interested in increasing the nature and extent of risks covered. This would have entailed an increase of premium, which may be unaffordable. An increase in cover without a premium rise could be addressed by spreading the risks over larger and more diverse geographical and agro-climatic areas and crops. This was possible only through collaboration with a prominent national agricultural insurer, which led to the decision to transfer the risk to AIC.
A four-stage awareness creation plus training programme was developed to make sure that all members in the delivery chain were comfortable with the product. The awareness programme was launched in 12 locations and resulted in 3,107 farmers enrolling and 1,007 hectares covered. Renewal rates for the five locations where the index based insurance product was sold for the second time varied from 8 per cent to 80 per cent. Claims were triggered in five locations and paid out through AIC.
As of August 2011
DHAN continued to focus on the expansion of the programme and used the time between the slacker summer seasons to understand how processes could be improved. This has led to an additional 2,400 farmers enrolling in the programme in two Federations where the product was rolled out in the Kharif season. DHAN also started preliminary work to test the impact of the changes to the processes and the overall impact of the programme.
The project moved its focus to understanding how and whether DHAN’s mutual set-up and related processes, along with the transfer of risk to AIC, can deliver value to the community members and lead to operational efficiencies for DHAN. The project also tested the business case for such an institutional model. The project focused on a few locations in the first phase, and planned to conduct an “in-depth analysis” of the activities being conducted as a part of the programme.
As of November2011
In 2011, in Kharif and Rabi, a total of 1,804 hectares of eight crops – Groundnut, Paddy, Pulses, Maize, Cotton and Millets – Bajra and Jower, cultivated by 8,743 farmers were insured. Due to the awareness created for the weather index insurance and the contact with the community through the year, the renewal ratio was overall 83 per cent, ranging from 30 per cent to 100 per cent across different blocks, with an expenses ratio of 47 per cent.
As of August 2012
DHAN continued with its activities across 16 federations and overall the project was able to achieve the following:
- Village-level infrastructure development of 150 rain gauges in 16 locations and sustainable maintenance and operationalization through the social capital of farmers’ federations
- Literacy on crop insurance in general and on rainfall indexed crop insurance in particular to about 30,000 farmers
- Capacity building to over 140 community leaders to manage the crop insurance for protecting the member farmers against the rainfall risks in farming
- During the project period of three years, cumulatively the rainfall risks were covered for eight crops – paddy, chillies, black gram, green gram, maize, bajra, and sorghumand groundnut for about 3,663 hectares, cultivated by about 15,233 farmers
- During the initial year, the rainfall risks were retained by the community through mutual insurance and this was changed to a collaboration with the nationalized premier agriculture insurer – Agriculture Insurance Company of India from year two, resulting in comprehensive coverage of rainfall risks at a reasonable premium. This demonstrated how links can be developed with larger programmes with national insurers, and the related advantages for both parties – communities develop and administer the programme with the insurance company providing benefits of a larger portfolio and carrying the risk
- Anin-house software is aiding the rainfall data analyses and interpretations. This rainfall data-base will help in developing different farming practice interventions over a period of time
- The community insurance governance (mutual insurance committee) at federations have been enabled and empowered on rainfall indexed crop insurance processes, administration and management
Date of last Learning Journey update: April 2013