A couple key takeaways, for me, included:
- Weather insurance reduces the incentive to lie about crop yield. To receive a payout with crop insurance, a farmer needs to have (or seem to have) a bad crop yield. With weather/rainfall insurance, rainfall levels are tracked at a district level, and cannot be manipulated by individual farmers.
- Explaining weather insurance to farmers is difficult. Loan officers need to be well-trained to understand the product they are selling, otherwise there can be a lot of misunderstandings.
- Type of rainfall (e.g., a huge storm), not only the total amount, alters rain's effect on crop yield.
Nilesh and Dan explain these nuances better than I can, so I'll stop now and once again give a link to their podcast, which is at the bottom of the linked page. Feel free to also check out our other podcasts too . . .
2 comments:
Weather is highly region specific, in case of rainfall. Blindly introducing a half baked product to the market, as it is being done now, will destroy the credibility if the whole concept.
Moreover, insurers are hijacking the idea, hoping to make a neat profit. In weather insurance the idea of a 3rd party weather monitoring agency is sacrosant. But organizations well connected to Insurance companies are both marketing the product and maintaining settlement weather stations. This is like asking the wolf to guard the sheep.
I hope you guys will look more into this aspect of weather insurance in India too.
"""Hi,
Nice article & I think that weather insurance is a good step as in India 60% people are living on agriculture so if anything wrong happens to their crop then there will be lots of problem to them & others also face troubles. Here is an online tool which I think you might be interested in, which doens't talks about weather insurance, but helps people to plan their insurance according to their needs & budget especially health insurance & retirement plan.
Please check this out at - http://www.simpleinsurance.co.in/"
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