Transcript Document

OVERVIEW
• Indian Agriculture
• Agriculture Risks
• Crop Insurance: Evolution
• Crop Insurance: Types of Products & Perils Insured
• Crop Insurance: Government Support
• Crop Insurance: Major Players
• Crop Insurance: Risk Transfer Mechanism
• Crop Insurance: Distribution Channels
• Crop Insurance: New Initiatives
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Indian Agriculture
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Indian Agriculture: Salient Features
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1.2 billion population
120 million farm holdings
80% farmers own less than two hectares
61% of rural households are farming households
145 million hectares of cultivated land
190 million hectares of gross cropped area
1.2 Hectare Average Farm-holding size
50% of area under cereals and millets
52% of the employment provided
69% of population is sustained
Subsistence agriculture dominates
Agrl. GDP estimated at US $ 285 billions (FAO, 2010)
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Agriculture Risks
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Rainfall variability is dominant due to the
presence of the Monsoon (seasonal winds
blowing from the Indian Ocean and Arabian
Sea in the southwest bringing heavy rainfall)
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Monsoons contribute 78% India’s annual
rainfall - undergoes wide inter annual
variations
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Large variations in rainfall distribution
(<10cm in western desert to >1000cm in
northeast)
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Disparity in the rainfall distribution is so
great – droughts and floods occur at different
parts of the country at the same period and in
the same place at different periods
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One - third of the country is mostly under
threat of drought
One - sixth of the country prone to floods
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India
Crop Insurance: History
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Evolution of Crop Insurance
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J S Chakravarthi proposed ‘Drought Insurance’ based on rainfall index in 1920
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First ever crop insurance started in 1972 for H-4 cotton based on ‘individual
farm’
In 1979 a pilot insurance was introduced based on ‘homogenous area’ based
yield index (Pilot Crop Insurance Scheme – PCIS)
In 1985 the PCIS was converted into a country-wide ‘yield index’ based crop
insurance covering cereals, millets, pulses and oilseeds (Comprehensive Crop
Insurance Scheme – CCIS)
Scope of CCIS expanded in 1999 as National Agricultural Insurance Scheme –
NAIS
Pilot Seed Crop Insurance Scheme
Pilot Farm Income Insurance Scheme(FIIS)
Weather Based Crop Insurance Scheme – WBCIS was introduced from 2007
Modified NAIS as pilot in 50 Districts from Rabi 2010-11 season
Index Plus (Weather Index + Traditional)
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India
Agriculture Insurance Company of India
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Agriculture Insurance Company of India
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Created at the behest of the Government and took over crop
insurance operation w.e.f. 1st April 2003
Stakeholders: GIC (35%), NABARD (30%) and NIA, NIC, OIC &
UIIC (8.75% each)
Authorized Share Capital – INR 15 billion
Paid-up Share Capital – INR 2 billion
Net-worth as on 31st Mar 2012- INR 15.75 billion
2-Tier structure of Corporate Office and Regional Offices
17 Regional Offices as Underwriting Centres
240 dedicated technically qualified manpower
3rd tier at District level: one-man office (own) / franchise model
(out-sourced)
AICNET (ANNAPOORNA) for seamless IT integration
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India
Crop Insurance:
Types of Products & Perils Insured
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1. Traditional:
(i) Named Peril, (ii) Multi-Peril: Mainly for high value
crops
2. Index: (i) Yield Index (ii) Weather Index (iii) Crop Health Index
(iv) Multiple Trigger : Almost All Crops
3. Hybrid (Index Plus): Weather + Named peril: pilot on Grapes &
Apples
4. Income:
Revenue Based (piloted in 2002-03): stopped after 2003 due to
conflict with existing government price stabilization mechanism
National Agricultural Insurance Scheme [NAIS]
(Government’s flagship Yield index Crop Insurance Program)
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Introduced in 1999 and presently in operation countrywide
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Area-Yield Guarantee
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Homogenous Area approach
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Available to all Farmers - compulsory for borrowing & optional for non-borrowing
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Covers Food crops, Oilseeds & Annual Commercial / Horticultural Crops
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Indemnity levels vary from 60% to 90% of past average yield
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Sum Insured - Loan amount to 150% of value of Yield
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Premium rates
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Food crops & Oilseeds – ranges from 1.5% to 3.5%
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Annual Commercial / Horticultural Crops – Actuarial
Indemnities exceeding Premium for food crops & oilseeds; and 150% of Premium for
annual commercial /hort. crops are borne by the Government
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Modified NAIS: How it Works?
Sum Insured
(INR):
Crop: Sorghum
Year
10000
Yield
2004
2005
2006
2007
2008
2009
2010
Current Yield - 2011
(Kg/Ha.):
Average Yield of latest
7 years: (Kg/Ha.):
Average Yield of latest
7 years less 2 calamity
years (Kg/Ha.):
350 calamity year1
950
1200
875
250 calamity year2
950
1200
650
825.00
1035
Risk category
high risk
medium risk
low risk
Indemnity
level TY (Kg/Ha.)
70%
724.5
80%
828
90%
931.5
Shortfall
(Kg/Ha.) shortfall %
74.5
11.46%
178
27.38%
281.5
43.31%
claim
(INR)
1146.15
2738.46
4330.77
NAIS: How it Works?
Sum Insured
(INR): 10000
Crop: Sorghum
Year Yield (Kg/Ha.)
2004
350
2005
950
2006
1200
2007
875
2008
250
2009
950
2010
1200
Current Yield - 2011
(Kg/Ha.):
Average Yield of latest
5 years: (Kg/Ha.):
650
895.00
Risk category
high risk
medium risk
low risk
Indemnity
level TY (Kg/Ha.)
60%
537
80%
716
90%
805.5
Shortfall
claim
(Kg/Ha.) shortfall %
(INR)
0
0.00%
0.00
66
10.15%
1015.38
155.5
23.92%
2392.31
NAIS - Coverage Highlights
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Being Implemented in 25 States & 2 Union Territories
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Covers more than 35 different crops each during Kharif and Rabi
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About 75% of claims attributed to drought
SEASON
FARMERS
AREA
COVERED
(Mil. HA.)
(Mil.)
FARMERS
BENEFITTED
PREMIUM SUBSIDY CLAIMS
(Mil.)
US $ Millions.
Kharif 2010
12.684
SUM
INSURED
17.195 5267.80
Rabi 2010-11
2010-11
Kharif 2011
4.897
17.581
11.554
6.856
24.051
15.774
Rabi 2011-12
2011-12
5.177
16.731
7.173
22.947
160.38
10.09
361.56
2376.00
7643.80
5193.07
64.00
224.38
158.11
19.78 128.31
1.065
29.87 489.84
3.308
10.78 Claims under Process
2222.22
7415.29
61.11
219.22
16.67
27.44
2.243
Risk on
The risk based premium equals approx. US $ 750 million
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Weather Based Crop Insurance Scheme (WBCIS)
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Government providing support since 2007
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Indemnifies farmers against deemed crop losses due to adverse weather
incidence
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Crops covered include perennial & horticulture crops like mango, apple,
cashew, grapes & orange
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Sum Insured based on ‘cost of cultivation’
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Risk based Premium rates
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Upfront Premium Subsidy from Government
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Payouts based on pre-defined triggers on specified weather parameters
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AIC + 4 Private sector Insurers involved
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Weather Index Parameters
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Rainfall: Deficit rainfall, Excess rainfall, Consecutive Dry/ Wet Days
, Number of rainy days
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Temperature: Maximum Temperature (heat), Minimum Temperature
(frost), Mean temperature, daily chilling units
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Relative Humidity
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Wind : Speed
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Disease proxy: Combination of rainfall, temperature & humidity
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Pilot WBCIS
Crop: Groundnut
PERIOD
1 A.
Rainfall Volume
1 B.
Rainfall
Distribution
(Consecutive Dry
Days)
Rainfall of less than
2.5
TRIGGER I (<)
TRIGGER II (<)
EXIT
RATE I (Rs./ mm)
RATE II (Rs./ mm)
Max. Payout (Rs.)
TOTAL PAYOUT (Rs.)
PERIOD
TRIGGER DAYS (>=)
PAYOUT (Rs.)
Season: Kharif
PHASE-I
21st June to
15th July
80 mm
40 mm
20
25
75
2500
10000
PHASE - II
16th July to
15th Aug
160 mm
80 mm
30
25
60
5000
PHASE – III
16th Aug to
30th Sept
80 mm
40 mm
20
25
75
2500
1st July to 31st August
25
20
1500
3000
30
5000
TOTAL
5000
PAYOUT (Rs.)
mm in a day shall not be considered as a rainy day; and multiple payouts
considered
Max. Payout (Rs.)
15000
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S.No Year
States Districts Farmers Area (Ha.) Sum Insured
Insured (Millions) (US $ Mill) Premium Payouts
Claim
(Millions)
(US $ Mill) (US $ Mill) Ratio
1 2007-08
5
34
0.664
1.042
350.31
48.47
21.33 44.02%
2 2008-09
14
91
0.375
0.482
177.38
16.34
9.89 60.54%
3 2009-10
14
143
2.362
3.421
994.49
89.51
69.00 77.09%
4 2010-11
17
205
9.295
13.2
2866.46
258.86
126.98 49.05%
5 2011-12
17
230 11.607
15.629
4179.99
370.28
234.38 63.30%
TOTAL
24.303
33.774
8568.63
783.45
461.59 58.92%
Source: Government of India and AIC
2011-12 figures are provisional
Pilot on Modified NAIS
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Premium rates actuarial, supported by up-front subsidy in premium
& Insurer responsible for the claim liabilities
Insurance unit for major crops is village panchayat or any other
equivalent unit
In case of prevented / failed sowing, claims upto 25% of the sum
insured is payable, and insurance cover ceases thereafter
Post harvest losses caused by cyclonic rains are assessed at farm
level for the crop harvested and left in ‘cut & spread’ condition
Individual farm level assessment of losses to be done in case of
localized calamities, like hailstorm and landslide
On-account payment up to 25% of likely claim will be released as
advance, for providing immediate relief to farmers in case of severe
calamities
Threshold yield will be based on average yield of past seven years,
excluding upto two years of declared natural calamities
Coverage levels are 70%, 80% & 90% corresponding to high risk,
medium risk & low risk crops / areas
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Pilot Modified NAIS
Season
Kharif 2011
Rabi 2011-12
2011-12
Farmers Area
SumFarmers' Total
(‘000)
(‘000 Ha.) insured (US Prem. (US Prem. (US
$ Millions) $ Millions) $ Millions)
427
694
298.33
10.89
25.53
657
588
432.22
14.87
41.11
1084
1182
730.56
25.76
66.67
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Other Products… (Contd…)
Biomass Index:
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Piloted for crops like wheat and mustard
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Needs to be stabilized
Traditional:
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Named Peril for high value crops like fruits, plantation crops (mainly natural
calamities , and specified pests & diseases)
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India
Crop Insurance: Government Support
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Government Support
Yield Index:
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Crop Cutting Experiments are organized by Provincial governments
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Claims subsidy (NAIS) and premium subsidy (MNAIS), equally shared by Federal
& Provincial governments
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Service Tax exemption
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Provincial governments support insurance awareness programmes
Weather Index:
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Public weather station network
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Premium subsidy, equally shared by Federal & Provincial governments
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Service Tax exemption
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Provincial governments support insurance awareness programmes
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Crop Insurance: Distribution Channels
Existing:
1.
RFIs (nominal service charge)
2.
Insurance Intermediaries & Micro insurance agents (commission / brokerage)
3.
Livelihood / Community Organizations (No fees)
4.
GIPSA network of insurance agents (commission)
5.
Direct
Proposed:
1.
Portal based on-line service
2.
Common Service Centres (CSCs)
3.
Banking Correspondents (BCs)
India
Crop Insurance: Risk Transfer
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1. NAIS (Food crops & Oilseeds): Government
(Administered Premium: US $ 200 million) ~ Risk Prem. US $ 750 million`
2. Others:
NAIS (Commercial / Horticulture) (Premium: US $ 40 million)
WBCIS (Premium: US $ 375 million)
MNAIS (Premium: US $ 65 million)
a)
Retention: 20% - 40% (AIC - 30%)
b)
Domestic Reinsurance: 10% - 40% (AIC - 40%)
c)
International Reinsurance: 30% - 70% (AIC – 30%)
India
Crop Insurance: New Initiatives
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WBCIS:
1.
Index +
2.
Double-Trigger product
3.
Savings linked (Loyalty Discount) based product
4.
TOPS based weather data generation
MNAIS:
1.
GPS enabled cell phones to audit yield estimation
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Satellite imagery based area estimation and crop health reporting
3.
Remote Sensing based Information and Insurance for Crops in Emerging
Economies (RIICE)
Micro Health Insurance
Population Demographics
 Land Area:
 Population:
 Population Density:
- Males:
- Females:
- Rural:
- Urban:
 Sex Ratio:
 Life Expectancy:
 Infant Mortality:
 Maternal Mortality:
Source: The Census of India, 2011
3.28 Million Sq. KM (2% of Global)
1.21 billion (17.5% of Global)
324 / Sq. KM
623.72 (51.54%)
586.46 (48.46%)
833 million (68.84%)
377 million (31.16%)
940 F / 1000 M
64.6 Yrs
47 (1000)
212 (100000)
MICRO INSURANCE (MI) REGULATIONS
• Called: IRDA(MI) Regulations 2005
• UNDER SEC 114 A OF INS ACT 1938, SEC 26 IRDA ACT 1999, issued
on 10th November 2005
• Purpose: special care/attention of the resource poor
• Provide- small value pol + low price+ higher benefits+ simple
contract+ maximum reach+ need of people
• The product should have caption “MI” product
• Product literature in ‘local’ / ‘vernacular’ language
• Cross branding between Life and Non-life is allowed
• Micro Insurance Agents can be from SHGs / NGOs / MFIs, to be
appointed by insurers, with 25 hours training
• Life Micro Insurance Agents (31.03.2011): 10482
• Non-Life Micro Insurance Agents (31.03.2011): 9460
Health Insurance for the Poor
• For people living below poverty line, an illness represents a
permanent threat to their income earning capacity
• Fall into debt trap
• Ignore treatment due to lack of resources, fearing wage
loss, force of selling assets
• These tragic outcomes can be avoided through a health
insurance which shares the risk of a major health shocks
across many households by pooling them together
• Hence Rashtriya Swasthya Bima Yojana –RSBY (National
Health Insurance Scheme) came into picture
Rashtriya Swasthya Bima Yojana (RSBY)
• Launched Ministry of Labour and Employment, Government of
India for BPL families
• The beneficiary is any Below Poverty Line (BPL) family, whose
information is included in the district BPL list prepared by the
State government
• The eligible family needs to come to the enrollment station, and
the identity of the household head needs to be confirmed by the
authorized official
• Beneficiaries need to pay Rs. 30 per family at the time of
enrollment
• RSBY provides cover for hospitalization expenses upto INR
30,000/- for a family of five on a floater basis
• Transportation charges are also covered upto a maximum of INR
1,000/- with INR 100/- per visit
• Federal government pays 75% of the total premium while State
Government pays the remaining premium
• States select insurance provider based on competitive bidding
Unique Features of RSBY
• Empowering the beneficiary
• Business Model for all Stakeholders
- Insurers
- Hospitals
- Intermediaries
- Government
• Information Technology (IT) intensive
• Safe and foolproof
• Portability
• Cashless and paperless transactions
• Robust monitoring and evaluation
RSBY Display At Accredited Hospital
RSBY Signage At Accredited Hospital
STATUS AS ON 31ST MARCH 2011
• Total BPL families: 64.57 million
• BPL families covered under RSBY: 32.34 million
• Total Hospitals accredited: 12556 (8637 private and 3919
government)
Health Insurance Premium
Insurer
(INR Millions)
Non-Life Private
12240
Non-Life Public
Standalone Health insurers
Total
US $ Millions (Approx.)
19736 31365 38240 48833 69126
112
1559
5351 10721 15357
32088 51249 66254 83052 114798
641.76 1024.98 1325.08 1661.04 2295.96
Source: IRDA Annual Report 2011
18325
22663
23498
30315
नमस्कारम
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