Index-Based Insurance in Agriculture

FARMD (October 2011) | Insurance is a small part of an array of approaches and instruments that are available to help the management of risks through transferring risk to a third party. Agriculture applications of index-based insurance – a form of insurance – have emerged to overcome some of the difficulties associated with traditional insurance products in developing-countries. Although the development and application of these instrument is still in its early stages, there are a number of advantages as well as challenges associated with their implementation. Many pilot projects have started, but scaling up index-based insurance projects has only happened in a few developing countries (notably India).

FARMD's team puts together a set of resources on this topic, to inform and facilitate knowledge exchage among practitioners working in this field. 

Webinar Materials on Crop Insurance in Pakistan

AgriFin (February 28, 2013) | In 2008, Pakistan launched a crop loan insurance scheme. This was the outcome of a two-year effort of the Central Bank’s Task Force on Crop Loan Insurance which comprised representatives from banks, insurance companies, farmers, and the federal government.

In this webinar, two of the Task Force members, Kashif Umar Thanvi, HBL, and Azfar Arshad, Jubilee General Insurance discussed how the insurance product was developed and the challenges faced in its implementation.>>Learn More

Download the Presentation (PDF) | Listen to the Webinar (via Adobe Connect)

Articles:

Feasibility of Using the FAO-Agricultural Stress Index System (ASIS) as a Remote Sensing Based Index for Crop Insurance

Oscar Rojas and Shukri Ahmed, FAO

July 2012 | In recent years, weather index insurance has gained significant international attention.  Multilateral agencies and donors are supporting the development of index insurance products. In June 2012 an initial consultation workshop with the purpose of implementing the G8 Global Action Network to Accelerate the Availability and Adoption of Agricultural Index Insurance held in Rome. The participating institutions (FAO, FERDI, IFAD, IFPRI, ILO, IRI, JICA, SYNGENTA, SWISS-RE, UCDAVIS, USAID, University of Athens and WFP) agreed that the Action Network would enhance the understanding of agricultural index insurance and promote its availability and adoption where appropriate; as part of broader risk management strategies. Read the Full Article

Risk Management in Rice Farming in Indonesia: a Pilot Project for Agricultural Insurance

Bambang Sayaka and Sahat Pasaribu, Indonesian Center for Agricultural Socio-Economic and Policy Studies

FARMD (September 2012) | The rice farm business in Indonesia is risky due to natural calamities, such as drought in the dry season and flood in the wet season. Pests and diseases are also main threats to rice farming. Those threats could affect the rice yields leading to lower production or, to some extent, total harvest failure (puso). Currently, the farmers have to deal with lower yields or harvest failure by themselves. Since 2011 the Government of Indonesia allocates budget to cover rice farmers’ losses due topuso. The allocated fund to cover rice puso is in accordance with Act No. 12/1992 on Crops Farming and Presidential Instruction No. 5/2011 on Securing National Rice Production in dealing with Extreme Climate. Read the Full Article

The Usage of Grids in Risk Management of Agriculture in Mexico

Jesús Escamilla-Juárez and Luisarturo Castellanos-Hernández, CatRiskMéxico

FARMD (July 2012) | Due to its geographic location, Mexico is a country that is highly exposed to catastrophic events, related mainly to hydro-meteorological and geological natural phenomena. In a context in which insurance availability is insufficient, even more so for rural low-income producers exposed to catastrophic climatic events, the Mexican Government was faced with the need to strengthen its networks of social protection and to generate mitigation mechanisms that would meet the needs of those producers, granting them economic support in order to reimburse their losses and reactivate their productive cycle.  The administration of this program is managed by the Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación (SAGARPA, Agriculture Ministry) through a National Fund for Agriculture Disasters, created in 2003, currently named Componente para la Atención a Desastres Naturales en el Sector Agropecuario y Pesquero (CADENA). Read the Full Article

Index-Based Insurance Project Database

FARMD has put together a database of recent development efforts to support index-based insurance pilots. Check the map to see the worldwide distribution of projects and search the database to get more information on each initiative. Search the Database

Resources on Drought & Index Insurance

Recent Publications

The FARMD Resource library has over 140 documents related to agricultural insurance and index insurance. Visit the library to find case studies, briefing notes, research papers, and more.Search the Library.

Featured Publication: Weather Index Insurance: Scope, Challenges and Guideliness for Development Practitioners.  The publication has been produced by the World Bank’s Agricultural Risk Management Team (ARTM) in an effort to put together the knowledge that has been generated from almost eight years of work in this field. The document provides guidance to practitioners on the implementation of weather index programs, from the early stages of pre-feasibility to implementation. The publication is now available in the resources section of FARMD

 

 

Training Materials

Featured Practitioners in Index-Based Insurance