The working group on risk management in
Package Insurance with Crop - Constraints
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| 4.7.2. Package Insurance with Crop - Constraints It may look seemingly convenient to cover such varied assets / items along with crops under scheme like NAIS. However, there are practical difficulties, such as. Crop Insurance is of seasonal nature (about 4-6 months, while all other items / assets listed under package insurance, need annual policies. Short period policies could be issued for items other than crops, but the premium rates would be high, and renewal would be cumbersome. NAIS is based on an Area Approach, treating all insured farmers growing a particular crop as a single entity, while other items would not be pliable to such abroad approach, as such items owned by different farmers, would need different treatment. Agriculture Risks are covariate (systemic) in nature. Thus, it is deemed that risks affecting all farmers in an area could be fairly dealt under the Area Approach. The other risks affecting items other than crops are independent in nature and hence, it will be difficult to connect loss / damage of other assets, to operation of covariate risks. In other words, the assets other than crops can be correctly indemnified in the event of loss only under individual assessment. Crops can be categorized broadly under a generic name, while it would be totally different in the case of other assets. For example, there would be different age groups of livestock, different sexes, breeds, etc. all attracting different premium rates etc. The Working Group, therefore, feels that a composite policy covering all important assets of farmers cannot be combined with area based crop insurance program. Download 0.68 Mb. Share with your friends:
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