Piloting innovation led transformation in Indian agriculture insurance

Transcription

1 Piloting innovation led transformation in Indian agriculture insurance 13/11/2014

2 Agenda Indian Agriculture Landscape Indian Agriculture Insurance Schemes Implementation Stake Holders View Overall Challenges Future Outlook

3 Agricultural landscape Contributes 14% to GDP and employ more than 50% workforce Demographically broadest economic sector playing key role in socioeconomic fabric 70% small and marginal farmers using old and manual production techniques Less than 40% of land is irrigated leading to high dependency on weather

4 Crop Insurance Journey of 15 Years AIC was formed and National Agriculture Insurance Scheme (NAIS) launched Only PSU was allowed to implement Yield based and area approach Claim liability beyond 100% shared by Govt Private Sector was allowed to implement Weather Based Crop Insurance Scheme (WBCIS) Index based area approach basis Reference Weather Stations Premium Subsidy (Rates capped basis crop type) No Claims subsidy Private Sector was allowed to implement Modified National Crop Insurance Scheme (MNAIS) Yield based and area approach at an lower ground level Premium Subsidy Claims Subsidy over 500%

5 NAIS: Performance over the years NAIS - Claim Analysis % % % % % % Gross Premium (Mn USD) Claim (Mn USD) Claim Ratio (%) % % % % % % % % % % % % 0.00% Average Claim Ratio of 350% - Higher Government Liability * Data Source - DAC, MoA, GoI

6 NAIS: Performance over the years NAIS - Penetration Farmer Insured ('000) Farmer Benefitted ('000) Area Insured ('000 Ha) Farmer Benefitted (%) 39.7% 20.5% 43.2% 30.8% 21.3% 21.9% 25.2% 17.2% 32.3% 37.7% 19.2% 18.7% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% NAIS was the 2 nd Crop Insurance Scheme to be introduced in India after several pilots * Data Source - DAC, MoA, GoI

7 NAIS: Performance over the years Benefits Low Start-up cost Subsidized Premium Rate Short Comings Coverage No Pre-Sowing & Post Harvesting Cover No crop cutting experiments for Horticulture and Vegetables crops Insurance Principles Adverse Selection Tampered yield Data Indemnity Delayed Claims Larger Insurance Unit Size Administrative High Loss Assessment Cost Unplanned claims subsidy

8 WBCIS: Performance over the years WBCIS Claim Analysis Gross Premium (Mn USD) Claim (Mn USD) Claim Ratio (%) 70.8% 60.0% 77.1% 49.2% 63.8% 85.6% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% * Data Source - DAC, MoA, GoI High Acceptability of Scheme across States

9 WBCIS: Performance over the years WBCIS-Penetration Farmer Insured ('000) Farmer Benefitted ('000) Area Insured ('000 Ha) Farmer Benefitted (%) 33.3% 61.2% 63.6% 46.4% 54.2% 79.3% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% Benefit shared under this Scheme are in sync with actual coverage * Data Source - DAC, MoA, GoI

10 WBCIS: Performance over the years Benefits Short Comings Faster Claim Settlement Higher No. of Benefitted Farmers Control on Adverse Selection Good Risk Classification Low Loss Assessment Cost Better Seasonal Disciple Complexly designed by some of the States due to poor product knowledge High Start-up Cost due to installations of weather stations at closer radius

11 MNAIS: Performance over the years MNAIS Claims Analysis Gross Premium (Mn USD) Claim (Mn USD) Claim Ratio (%) 62.2% 88.8% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% * Data Source - DAC, MoA, GoI Scheme is in nascent stage and picking up year on year

12 MNAIS : Performance over the years MNAIS - Penetration Farmer Insured ('000) Farmer Benefitted ('000) Area Insured ('000 Ha) Farmer Benefitted (%) 18.3% 23.2% 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% * Data Source - DAC, MoA, GoI Extended Coverage to NAIS Helping in better Acceptability

13 Stake Holder view on Implementation Central Government Standardization of Products Standardization of Scheme Guidelines Long term District Allocations Transparency of Data Timely Subsidy releases State Government Varied Products every season Claims to be paid every season Low Technical Know How Provisioning of Budget Insurers In consistent approach for implementation of the scheme guidelines Seasonal allocation leading to short term implementation Lack of adequate quality weather/yield data for pricing the products Delay in premium subsidy putting strains to financial aspects of the organization

14 Overall Challenges Scattered land holding Area under cultivation is 143 mn hectares >70% of the farmers are having land area less than 1 hectare Scattered crop pattern - Multiple cropping, intercropping Multi Linguistic Poor administrative infrastructure Lack of awareness among farmers

15 Future outlook Proposed new schemes merging yield based and weather based claim estimation Use of technology based platform for claim settlement Central government exercising more diligence in due course to ensure uniformity in all states Increase of coverage under non loanee farmers

16 Thank You