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Table-6: Reasons for Buying Weather Index Insurance in India

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Table-6: Reasons for Buying Weather Index Insurance in India
Kharif
2004
Kharif
2005
Reasons for buying insurance
Frequency % Frequency %
Security risk reduction
144 54.8 181 53.2
Could not afford to lose harvest income
25 9.5 11 3.2
Low premium
19 7.2 1 0.3
Advice from progressive farmers
18 6.8 0 n/a
Other, trusted farmers bought insurance
17 6.5 5 1.5
Advice from village officials
10 3.8 1 0.3
High payout
10 3.8 10 2.9
I grow a lot of castor
7 2.7 4 1.2
Product was well explained
5 1.9 0 n/a
I grow a lot of groundnut
4 1.5 0 n/a
Luck
4 1.5 5 1.5
Paid out for previous year
0 n/a 107 31.5
Advice from BUA members
0 n/a 11 3.2
Total
263 100 340 100
Source: ICRISAT survey
The categories listed were created from open-ended survey responses to the question, Why did you buy the insurance product for the last kharif?” The same categories may not apply for both years.
4.4.2. Summary of Pilots by Insurance Companies:
Till date, three companies have introduced pilot projects on rainfall insurance. The details of the products and concerns are discussed below:
(i). Agriculture Insurance Company of India Limited (AIC)
Agricultural Insurance Company of India (AIC) was incorporated on 20th December to protect and secure financial support, in the event of damage to crops. AIC introduced
Rainfall insurance known as ‘Varsha Bima’ during the 2004 South-West Monsoon period.
Varsha Bima provided five different options, suiting varied requirements of the farming community. These are – (i) seasonal rainfall insurance based on aggregate rainfall from June to September, (ii) sowing failure insurance, based on rainfall between 15
th
June and 15
th
August, (iii) rainfall distribution insurance, with weights assigned to different weeks between
June and September, (iv) agronomic index, constructed on the basis of water requirement of crops at different pheno-phases and (v) catastrophe option, covering extremely adverse deviations of 50 percent & above in rainfall, during the season. Varsha Bima has been successfully piloted by AIC, in 20 rain gauge areas, across 125 IMD weather stations, spread over Andhra Pradesh, Karnataka, Rajasthan and Uttar Pradesh, in 2005.

In 2006, Varsha Bima, based on its success, was extended to 150 districts, covering states across the country viz, Andhra Pradesh, Chhatishgarh, Gujarat, Karnataka,
Maharashtra, Madhya Pradesh, Orissa, Tamil Nadu, Uttranchal, and Uttar Pradesh Along with earlier options, the scheme also provided a Vegetative Phase option, covering the period from 16
th
August to st October. Varsha Bima-2005 covered 1.25 lakh farmers with a premium income of Rs. 3.17 crore against a sum insured of Rs. 55.86 crore.
AIC also implemented Sookha Suraksha Kavach, ab unique rainfall insurance product,
designed exclusively for drought stricken farmers of Rajasthan, providing drought risk insurance. The product was implemented in 23 districts, covering crops like Guar, Bajra,
Maize, Jowar, Soyabean and Groundnut.

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