A lack of data on exposure, historical crop yields and insured losses makes insuring Indian crop risk a challenge, said Mr Shankar Garigiparthy, Country Manager & CEO, India, Lloyd's of London.
A probabilistic crop risk model of the crop insurance market must reflect the way crop insurance is administered, said Mr Garigiparthy, who was speaking to The Hindu Business Line in an interview, on the occasion of the release of the report ‘Harvesting Opportunity: Exploring Crop Reinsurance in India’ by Lloyd’s and risk modelling firm RMS.
He added that this probabilistic crop risk model should include attributes like major drivers of crop yield variability, nationwide coverage for most perils, model for insurance clusters, attritional and catastrophe losses, impact of irrigation, separate models of different crops for the two main ‘Kharif’ and ‘Rabi’ cropping seasons and models for the Prime Minister’s Pradhan Mantri Fasal Bima Yojana (PMFBY) and weather-based crop insurance schemes, modelling for historical and probabilistic simulated losses and exposure management functionality.
“A strong crop risk model will provide a valuable tool in understanding and accounting for uncertainty,” he said.
In his interview with Business Line, Mr Garigiparthy also said that India’s national crop insurance data portal requires a greater wealth of data to fully meet the reinsurance market needs. Gathering detailed and real-time exposures at the time of planting (such as crop variety, planting dates, irrigation levels) and better monitoring via remote sensing will help to improve crop risk modelling. With more insurers being set up for PMFBY, there will be wider participation by farmers.
Once there is better quality data available, crop models can become even more sophisticated and factor in seed varieties and fertiliser use, and evolve to allow in-season loss prediction by applying forecast weather data to crop yield models, as well as estimating crop yield and loss behaviour under different climate scenarios.
Mr Garigiparthy also suggested that while the PMFBY has been useful in reducing premiums for farmers and expanding the coverage of crop insurance, a strong technology-backed platform could help ensure more accurate claim information and claim settlement procedures for farmers. He still sees opportunities to increase awareness about PMFBY across villages and include more farmer in the scheme to reduce the protection gap, reported The Hindu Business Line.