India’s agricultural insurance market is ripe for change through technology
India’s government-sponsored agricultural insurance programme, while greatly improved since it was overhauled in recent years, must draw on lessons from other countries where crop insurance schemes have been very successful and use technology if it is to fulfil its potential and purpose.
That is the conclusion of a report by broker New Dawn Risk in a whitepaper “Technology brings new opportunities for India’s crop insurance scheme” released to tie in with the SIRC 2020 Re-Mind virtual conference, taking place this week.
The report details changes that have been made to the government-sponsored scheme during 2020, which are designed to make it more efficient and ultimately more attractive for the nation’s farmers and for participating insurers.
These include the introduction of a three-year contract for insurers; and strict rules to prevent delays in claims handling and to avoid moral hazard.
The centre point for change, however, is the introduction of a range of new technologies, including a mobile portal, and the use of sophisticated drone and satellite technologies. All these are designed to allow automated handling of the many claims that the scheme generates and, ultimately, have the power to transform the profitability of the scheme for insurers and reinsurers.
“We hope that, with such positive news, our guide will be a useful source of information.” Max Carter, New Dawn Risk
Consistency needed
Contributing to the report, the Agricultural Insurance Company of India commented: “With the advent of new concepts in agriculture, the scope for crop/agriculture insurance in India is vast. The main challenge is consistency. The scheme has changed drastically in a very short space of time.
“Reinsurers believe there is ample opportunity, but only if they decide to commit to this product for the longer term and take a long-term view despite the changes.”
Max Carter, chief executive officer of New Dawn Risk, added: “India could certainly see new reinsurers entering its state-sponsored agricultural insurance market if costs were driven down for the local insurers, who have previously borne heavy administrative and operating costs.
“The increased use of satellites and drone imagery technology and adoption of high-quality mobile apps to carry out crop-cutting experiments, remote sensing methodologies to assess crops and low-lying satellites mean that India has taken positive steps towards increasing efficiency and reducing costs of administration.
“We hope that, with such positive news, our guide will be a useful source of information for international reinsurers who might consider participating in this refreshed scheme,” he concluded.
