What is Weather-Based Insurance : Addressing Climate Risk for Indian Farmer/ezeviral.com

What is weather based insurance

Weather Insurance is an indemnity for losses that may arise due to abnormal weather conditions. These abnormal weather conditions can be events such as excess or deficit in rainfall, or variations in temperature, wind speeds and humidity Weather based Crop Insurance Scheme (WBCIS) provides protection to the insured cultivators in the event of loss in crops yields resulting from the adverse weather incidences, Weather insurance offers financial protection against a loss that may be incurred as a result of adverse, measurable weather conditions. Premiums are determined by the likelihood of the insured weather event occurring and the amount of potential loss

How does Weather Based Crop Insurance Scheme (WBCIS) operate?

Weather based Crop Insurance Scheme (WBCIS) operates on the concept of “Area Approach” i.e., for the purposes of compensation, a ‘Reference Unit Area (RUA)’ shall be deemed to be a homogeneous unit of Insurance. This RUA shall be notified before the commencement of the season by the State Government and all the insured cultivators of a particular insured crop in that Area will be deemed to be on par in the assessment of claims. Each RUA is linked to a Reference Weather Station (RWS), on the basis of which current weather data and the claims would be processed. Adverse Weather Incidences, if any during the current season would entitle the insured a payout, subject to the weather triggers defined in the ‘Payout Structure’ and the terms & conditions of the Scheme. The “Area Approach” is as opposed to “Individual Approach”, where claim assessment is made for every individual insured farmer who has suffered a loss. Weather based Crop Insurance Scheme (WBCIS) provides protection to the insured cultivators in the event of loss in crops yields resulting from the adverse weather incidences, like un-seasonal/excess rainfall, heat (temperature), frost, relative humidity etc. Triggers are broadly fixed so as to capture the adverse incidence of weather parameters on crop yield. claims arise when there is a certain adverse deviation in Actual Weather Parameter Incidence in RUA (as per the weather data measured at RWS), i.e.,e.g. its “Actual temperature” within the time period specified in the Benefit Table is either less or more compared to the specified “ temperature Trigger”, leading to crop losses. In such case, subject to the terms and conditions of the Scheme, all insured cultivators under a particular crop shall be deemed to have suffered the same “adverse deviation” in temperature and become eligible for claims. Weather experience (rainfall in particular) on a particular day could be different even in smaller geographical area, but, in a span of a fortnight, month or season it evens out. RWS at Block / Tehsil level, by and large, reflects the weather experience of individual cultivators within a RUA

Objective of the Scheme

Weather Based Crop Insurance Scheme aims to alleviate the hardship of the insured farmers against the likelihood of financial loss on account of the anticipated crop loss resulting from incidence of adverse conditions of weather parameters like un-seasonal rainfall, temperature, frost, relative humidity etc. Weather Based Crop Insurance Scheme (WBCIS) uses weather parameters as a proxy for crop yields in compensating the cultivators for deemed crop losses. Payout structures will be developed to the extent of losses deemed to have been suffered using the weather triggers.

What is Covered under Weather Insurance?

Crops covered under weather insurance include:

👉🏻Food crops (cereals, millets and pulses)
👉🏻Oil seeds (mustard, sunflower, etc.)
👉🏻Commercial or Horticulture -Crops (cotton, coffee, tea, etc.)

Peris covered under weather insurance include:

👉🏻Rainfall: Deficit rainfall, excess rainfall, unseasonal rainfall, dry-spell, etc.
👉🏻Relative Humidity: High humidity levels leading to inability of plants to draw nutrients from the soil, thus damaging crops
👉🏻Wind: High wind speed or hot wind leading to reduced growth of crops, lodging of crops, etc.
👉🏻Temperature: Extreme temperature leading to spoilt crop, wilting of plants, etc.

Who Can Take Weather Insurance?
👉🏻Farmers involved in agricultural activities can take a weather insurance policy
👉🏻Owners of the farming land
👉🏻Farmers working on shared land, also called sharecroppers
👉🏻Tenants practicing agricultural activities for livelihood

Advantages of Weather Insurance
👉🏻A back-up income option in times of extreme weather conditions leading to break in farming
👉🏻no need to opt for another mode of earning a living as the insurance aims at boosting farmers to continue with agricultural activities by providing better coverage in times of need
👉🏻Affordable premium leading to comprehensive sum assured
👉🏻There is a substantial government subsidy on premium where farmer premium rates are fixed at 1.5 – 2% of the sum assured on Kharif/ Rabi crops
👉🏻Adequately backed up finances lead to enhanced risk taking capacity of farmers
Credibility of loanee farmers increases

Important Aspects

👉🏻It is very important to notify your insurance company about the event within 60 days of its occurrence
👉🏻If the insurer fails to produce relevant documents supporting the claim, company shall not be liable to pay for the loss or damage thus occurred
👉🏻If a period of 12 month goes by without the insurer informing about the event leading to claim, no claims shall be entertained by the insurance company
👉🏻All loanee farmers are already covered in the government sponsored Weather Based Crop Insurance Scheme (WBCIS) on compulsory basis
👉🏻Non-loanee farmers can opt for WBCIS or other weather insurance schemes provided by insurance companies

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