Weather Based Crop Insurance in India
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 cri...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120305105832 http://hdl.handle.net/10986/3270 |
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okr-10986-32702021-04-23T14:02:08Z Weather Based Crop Insurance in India Clarke, Daniel J. Mahul, Olivier Rao, Kolli N. Verma, Niraj ADMINISTRATIVE EXPENSES AGRICULTURAL INSURANCE AGRICULTURAL INSURANCE SCHEME AGRICULTURAL PRODUCTION AMOUNT OF CAPITAL AMOUNT OF RISK APPLICATIONS BANKS BASIS RISK CAPITAL MARKET CAPS CLAIM CLAIM PAYMENT CLAIM PAYMENTS CLIMATE CLIMATE CHANGE CONSUMER PROTECTION CONSUMER PROTECTION LEGISLATION CONSUMERS COST OF CAPITAL COVERAGE CREDIBILITY CROP INSURANCE CROP INSURANCE PRODUCT CROP INSURANCE PROGRAM CROP INSURANCE SCHEME CROP LOSS CROP LOSSES DEPENDENT DERIVATIVE MARKETS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DISASTER DISASTER REDUCTION DISASTER RISK DISASTER RISK FINANCING DISTRIBUTION OF CLAIM DIVERSIFIED PORTFOLIO DIVERSIFIED PORTFOLIOS EXCHANGE RATE FARMER FARMERS FINANCIAL INSTITUTIONS FINANCIAL SECTOR FRAUD GENERAL INSURANCE GOVERNMENT SUBSIDY HAILSTORM INCOME INFORMATION DISCLOSURE INFORMED DECISIONS INSURANCE COMPANIES INSURANCE COMPANY INSURANCE CONTRACT INSURANCE CONTRACTS INSURANCE FRAUD INSURANCE MARKET INSURANCE POLICIES INSURANCE PORTFOLIO INSURANCE PRODUCT INSURANCE PRODUCTS INSURANCE PROGRAMS INSURANCE SCHEME INSURANCE SECTOR INSURER INSURERS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERPOLATION JUDGE JUDGMENT LONG-TERM YIELD LOSS RATIO MANDATE MARKET PRACTICE MARKET STRUCTURE MATURITY MATURITY DATES MICROINSURANCE MORAL HAZARD OUTBREAK POLICYHOLDERS PORTFOLIO PORTFOLIO RISK PREMIUMS PRIVATE INSURANCE PRIVATE INSURANCE COMPANIES PROCUREMENT PROGRAMS RATES REINSURANCE RETURN RISK ANALYSIS RISK CAPITAL RISK MANAGEMENT RISK SHARING SCENARIOS SCHEDULE OF PAYMENTS SETTLEMENT SUPPLY SIDE TOTAL COST WEATHER DERIVATIVE WEATHER DERIVATIVES WEATHER EVENTS WEATHER INSURANCE 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. 2012-03-19T17:29:28Z 2012-03-19T17:29:28Z 2012-03-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120305105832 http://hdl.handle.net/10986/3270 English Policy Research working paper ; no. WPS 5985 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper South Asia South Asia South Asia Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ADMINISTRATIVE EXPENSES AGRICULTURAL INSURANCE AGRICULTURAL INSURANCE SCHEME AGRICULTURAL PRODUCTION AMOUNT OF CAPITAL AMOUNT OF RISK APPLICATIONS BANKS BASIS RISK CAPITAL MARKET CAPS CLAIM CLAIM PAYMENT CLAIM PAYMENTS CLIMATE CLIMATE CHANGE CONSUMER PROTECTION CONSUMER PROTECTION LEGISLATION CONSUMERS COST OF CAPITAL COVERAGE CREDIBILITY CROP INSURANCE CROP INSURANCE PRODUCT CROP INSURANCE PROGRAM CROP INSURANCE SCHEME CROP LOSS CROP LOSSES DEPENDENT DERIVATIVE MARKETS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DISASTER DISASTER REDUCTION DISASTER RISK DISASTER RISK FINANCING DISTRIBUTION OF CLAIM DIVERSIFIED PORTFOLIO DIVERSIFIED PORTFOLIOS EXCHANGE RATE FARMER FARMERS FINANCIAL INSTITUTIONS FINANCIAL SECTOR FRAUD GENERAL INSURANCE GOVERNMENT SUBSIDY HAILSTORM INCOME INFORMATION DISCLOSURE INFORMED DECISIONS INSURANCE COMPANIES INSURANCE COMPANY INSURANCE CONTRACT INSURANCE CONTRACTS INSURANCE FRAUD INSURANCE MARKET INSURANCE POLICIES INSURANCE PORTFOLIO INSURANCE PRODUCT INSURANCE PRODUCTS INSURANCE PROGRAMS INSURANCE SCHEME INSURANCE SECTOR INSURER INSURERS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERPOLATION JUDGE JUDGMENT LONG-TERM YIELD LOSS RATIO MANDATE MARKET PRACTICE MARKET STRUCTURE MATURITY MATURITY DATES MICROINSURANCE MORAL HAZARD OUTBREAK POLICYHOLDERS PORTFOLIO PORTFOLIO RISK PREMIUMS PRIVATE INSURANCE PRIVATE INSURANCE COMPANIES PROCUREMENT PROGRAMS RATES REINSURANCE RETURN RISK ANALYSIS RISK CAPITAL RISK MANAGEMENT RISK SHARING SCENARIOS SCHEDULE OF PAYMENTS SETTLEMENT SUPPLY SIDE TOTAL COST WEATHER DERIVATIVE WEATHER DERIVATIVES WEATHER EVENTS WEATHER INSURANCE |
| spellingShingle |
ADMINISTRATIVE EXPENSES AGRICULTURAL INSURANCE AGRICULTURAL INSURANCE SCHEME AGRICULTURAL PRODUCTION AMOUNT OF CAPITAL AMOUNT OF RISK APPLICATIONS BANKS BASIS RISK CAPITAL MARKET CAPS CLAIM CLAIM PAYMENT CLAIM PAYMENTS CLIMATE CLIMATE CHANGE CONSUMER PROTECTION CONSUMER PROTECTION LEGISLATION CONSUMERS COST OF CAPITAL COVERAGE CREDIBILITY CROP INSURANCE CROP INSURANCE PRODUCT CROP INSURANCE PROGRAM CROP INSURANCE SCHEME CROP LOSS CROP LOSSES DEPENDENT DERIVATIVE MARKETS DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DISASTER DISASTER REDUCTION DISASTER RISK DISASTER RISK FINANCING DISTRIBUTION OF CLAIM DIVERSIFIED PORTFOLIO DIVERSIFIED PORTFOLIOS EXCHANGE RATE FARMER FARMERS FINANCIAL INSTITUTIONS FINANCIAL SECTOR FRAUD GENERAL INSURANCE GOVERNMENT SUBSIDY HAILSTORM INCOME INFORMATION DISCLOSURE INFORMED DECISIONS INSURANCE COMPANIES INSURANCE COMPANY INSURANCE CONTRACT INSURANCE CONTRACTS INSURANCE FRAUD INSURANCE MARKET INSURANCE POLICIES INSURANCE PORTFOLIO INSURANCE PRODUCT INSURANCE PRODUCTS INSURANCE PROGRAMS INSURANCE SCHEME INSURANCE SECTOR INSURER INSURERS INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERPOLATION JUDGE JUDGMENT LONG-TERM YIELD LOSS RATIO MANDATE MARKET PRACTICE MARKET STRUCTURE MATURITY MATURITY DATES MICROINSURANCE MORAL HAZARD OUTBREAK POLICYHOLDERS PORTFOLIO PORTFOLIO RISK PREMIUMS PRIVATE INSURANCE PRIVATE INSURANCE COMPANIES PROCUREMENT PROGRAMS RATES REINSURANCE RETURN RISK ANALYSIS RISK CAPITAL RISK MANAGEMENT RISK SHARING SCENARIOS SCHEDULE OF PAYMENTS SETTLEMENT SUPPLY SIDE TOTAL COST WEATHER DERIVATIVE WEATHER DERIVATIVES WEATHER EVENTS WEATHER INSURANCE Clarke, Daniel J. Mahul, Olivier Rao, Kolli N. Verma, Niraj Weather Based Crop Insurance in India |
| geographic_facet |
South Asia South Asia South Asia Asia India |
| relation |
Policy Research working paper ; no. WPS 5985 |
| description |
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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Clarke, Daniel J. Mahul, Olivier Rao, Kolli N. Verma, Niraj |
| author_facet |
Clarke, Daniel J. Mahul, Olivier Rao, Kolli N. Verma, Niraj |
| author_sort |
Clarke, Daniel J. |
| title |
Weather Based Crop Insurance in India |
| title_short |
Weather Based Crop Insurance in India |
| title_full |
Weather Based Crop Insurance in India |
| title_fullStr |
Weather Based Crop Insurance in India |
| title_full_unstemmed |
Weather Based Crop Insurance in India |
| title_sort |
weather based crop insurance in india |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120305105832 http://hdl.handle.net/10986/3270 |
| _version_ |
1764386712484577280 |