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Weather Based Crop Insurance in India [electronic resource] Daniel J. Clarke

Author/Creator:
Clarke, Daniel J.
Publication:
Washington, D.C., The World Bank, 2012
Format/Description:
Government document
Book
1 online resource
Series:
Policy research working papers.
World Bank e-Library.
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Other Title:
World Bank working papers.
Local subjects:
India. (search)
System Details:
Mode of access: World Wide Web.
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.
Notes:
Description based on print version record.
Contributor:
Clarke, Daniel J.
Rao, Kolli N.
Verma, Niraj
Mahul, Olivier
World Bank.
Other format:
Print version: Clarke, Daniel J. Weather Based Crop Insurance in India.
Publisher Number:
10.1596/1813-9450-5985
Access Restriction:
Restricted for use by site license.