Climate and Agriculture Insurance
- Weather Index Based Insurance
Index-based products determine the benefits paid to the policyholder by a pre-defined index that should be correlated to the crop yield. The compensation amounts are pre-agreed and, even if the actual loss and compensation do not match (this difference is called basis risk), payouts are made according to the pre-agreed payout scale. However, in order to best capture the correlation between yield and index, the index definition can vary based on the crop and location of production, as well as the data available to develop the product and other constraints. This product category has similarities with financial derivatives. There are a number of index-based products:
- Weather-index: a set of parameters representing the main weather risk is embedded in the index definition in order to capture the correlation between yield and weather. The parameters could measure rainfall, temperatures or wind, for example. The payout may be triggered when the index hits a value (also known as a strike), whether it’s a low value (e.g., deficit of rain) or a high value (e.g., degree of high winds).
- Area-yield:the index is the average yield observed in an area for a specific crop. This average is measured via random sampling of crops for a homogenous and pre-defined area where the index is applicable. Payout compensates for lower-than-expected yield and therefore captures the multiple risks to which the crop is exposed.
- Weather Index Based Insurance
- Indemnity-based products can cover different types of events and losses incurred by farmers:
- Named peril cover: only covers perils that are listed in the policy and up to the sum insured determined at the policy term’s inception. The compensation corresponds to the percentage of damage assessed once the risk has occurred, multiplied by the sum insured. The most commonly named peril in agriculture is hail; it is mainly written in European countries and can cover fruits and crops.
- Multi-peril cover insurance (MPCI): covers all perils (unless excluded) that can impact the yield. The sum insured is an expected yield (chosen based on historical yields), and the risk covered corresponds to a percentage of this expected yield (e.g., 0-70%). It is more comprehensive (and thus more expensive) than named perils. It is written mainly in the US and Canada.
- Revenue covers: protects against both yield and price losses. The sum insured therefore is a guaranteed revenue, and the payout is the difference between the guaranteed and actual revenue. It is usually available when crops are traded on commodities markets.
Under Agriculture Insurance, we provide the following insurances:
Crop Insurance
Livestock insurance is protection against accidents and unexpected events that may affect your animals. Livestock insurance policies broadly cover the death of livestock.
Overall, the platform aims to implement the government’s mission and vision for rural socio-economic development through the use of information and communication technology (ICT) in livestock extension activities.
When a natural catastrophe such as drought, flood, or pest attack damages crops, insurance companies offer protection against the financial risks. The main types of insurance policies are whole-farm insurance, individual-crop insurance, and specialty insurance.
Livestock Insurance
Livestock insurance is protection against accidents and unexpected events that may affect your animals. Livestock insurance policies broadly cover the death of livestock.
Overall, the platform aims to implement the government’s mission and vision for rural socio-economic development through the use of information and communication technology (ICT) in livestock extension activities.
Poultry Insurance
Poultry is another important sectors which need the attention of insurer, a lot of chickens die due to different epidemic diseases cause by the attacking of virus (result of temperature variation) which results to the great loss of the poultry traders or poultry farm owners. On the other hand, temperature is also considered as an important parameter for the better growth of chicken hence the insurance company may be planning to offer for the poultry sector is also based on weather index.
Fisheries Insurance
Insurance plays an important role in fishing safety, as it provides financial compensation for the loss or damage caused by events beyond the control of the insured.
Insurance provides many benefits to the fisheries sector, including:
- Protection against accidents and natural hazards.
- Compensation for loss/damage to fishing assets (vessels, equipment, infrastructure).
- Coverage of third-party liability.
- Compensation in case of crew injury and loss of life.
- Increased access to institutional credit and investment.
Floriculture Insurance
The policy provides cover for loss of or damage to the insured tree/fruits such as grape, citrus, banana, rubber, eucalyptus, tea, oil palm, orchids, roses etc.
Indemnity against loss or damage caused to the insured crop by one or more of the following events:
- Fire (including forest fire, bush fire)
- Lightning
- Riot and Strike
- Storm, Hailstorm, Cyclone, Typhoon, Hurricane, Tornado whilst in direct and immediate operation over the area which the crop insured herein stands
- Flood and Inundation
- Impact by road/rail vehicles, aircraft and other aerial devices or articles dropped therefrom
- Wild animals
- Earthquake
Horticulture Insurance
The policy provides cover for loss of or damage to the insured tree/fruits such as grape, citrus, banana, rubber, eucalyptus, tea, oil palm, orchids, roses etc.
- Scope of the Policy
- Fire (including forest fire and bush fire)
- Lightning
- Storm, Flood and Inundation
- Riot, Strike and Terrorism
Our Initiatives
Pragati Insurance has planned to start a pilot project on crop insurance. In Bangladesh there are two type of crop insurance; Weather Index Based (WIB) and Area Yield. Weather Index Based (WIB) is incorporating such high-end modern technology. Crop Insurance will decrease the risks faced by farmers during the climate changes. By having this insurance, the farmer will face less loss to some extent. Because the insurance companies will compensate for the losses due to climate change, the losses of the farmers will be reduced to a large extent. It will help the country’s economy, will accelerate it for the better future. Even if the climate changes, it will not affect the supply of crops and will play a positive role in improving the quality of people life.
Weather index based (WIB) insurance will be based entirely on weather indicators. For this reason, Pragati Insurance has planned to start a pilot project on crop insurance. Meanwhile, Pragati’s team has completed their 1st Focus Group Discussion (FGD) in Rangpur, Lalmonirhat, Thakurgaon with the collaboration of Lal Teer Seed Limited. The products were various seeds like chili, bitter gourd, brinjal seeds etc. The 2nd Focus Group Discussion (FGD) was at the Rangpur district Upazila Pirgacha product was aman paddy and the collaboration partner was Syngenta Foundation for Sustainable Agriculture Bangladesh (SFSA).
