Weather based crop insurance in India, Vol. 1 of 1

About

Countries

Data & Research

Learning

News

Projects & Operations

Publications

Topics

Home > Data & Research > Document Search > By Date > Report Details

Weather based crop insurance in India

Author:	Clarke, Daniel J.; Mahul, Olivier; Rao, Kolli N.; Verma, Niraj;	Collection Title:	Policy Research working paper ; no. WPS 5985
Country:	India;	Date Stored:	2012/03/05
Document Date:	2012/03/01	Document Type:	Policy Research Working Paper
Language:	English	Rel. Proj ID:	IN-India Crop Insurance Policy Work And Dissemination -- -- P125189;
Region:	South Asia	Report Number:	WPS5985
SubTopics:	Bankruptcy and Resolution of Financial Distress; Climate Change Economics; Debt Markets; Hazard Risk Management; Insurance & Risk Mitigation	Volume No:	1 of 1

Summary: The weather index insurance market in India is the world's largest, having transitioned from small-scale and scattered pilots to a large-scale weather based crop insurance program covering more than 9 million farmers. This paper provides a critical overview of this market, including a review of indices used for insurance purposes and a description and analysis of common approaches to design and ratemaking. Products should be designed based on sound agronomic principles and further investments are needed both in quantifying the level of basis risk in existing products, and developing enhanced products with lower basis risk. In addition to pure weather indexed products, hybrid products that combine both area yield and weather indices seem promising, with the potential to combine the strengths of the individual indices. A portfolio approach to pricing products, such as that offered by Empirical Bayes Credibility Theory, can be significantly more efficient than the standalone pricing approaches typically employed in the Indian market. Legislation for index insurance products, including consumer protection legislation, should be further enhanced, for example by requiring disclosure of claim payments that each product would have made in the last ten years. The market structure for weather based crop insurance products could better reward long-term development of improved product designs through product standardization, longer term contracts, or separating the roles of product design and delivery.


Official Documents Official, scanned versions of documents (may include signatures, etc.)
File Type		Description	File Size (mb)

	PDF 31 pages	Official version*	2.17 (approx.)
	Text	Text version**

	See documents related to this project

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.

** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.

Permanent URL for this page: http://go.worldbank.org/T34E1EWAV0