Kisan Diwas 2023: By combining traditional insurance models with cutting-edge technology like weather indices and satellite data, insurers can improve the accuracy of risk assessment in the agriculture industry
Every year on Kisan Diwas, we celebrate the hard work of our farmers, who work diligently to feed the nation. Farmers struggle to grow agricultural output and make a livelihood in the face of obstacles such as increasing temperatures, uncertain rainfall, and climate change. Recognising their devotion, it is critical to address these problems, especially in light of climate change.
Given the diversity of India's climate and its role as a major food producer, customised insurance solutions are required. As we honour their efforts today, let us commit to building a more robust future for our farmers.
The agricultural landscape of India consists of an array of climatic zones, ranging from desert stretches in Rajasthan to flood-prone lowlands in Assam. Each location presents its own set of issues, necessitating a comprehensive approach to insurance solutions.
Complicating matters further, India is a global leader in food production, farming a wide range of crops that extend from staple cereals like rice and wheat to high-value horticultural products like mangoes, apples, and a variety of vegetables. Addressing the varied risks associated with different crops demands insurance solutions created with a strong awareness of the agriculture industry's distinct requirements and characteristics.
India holds the dual responsibility of providing food security for its growing population while also supporting the lives of millions of agricultural workers. The fluctuating impact of climate change adds another layer of susceptibility to this essential industry, demanding risk mitigation measures. Without targeted solutions, the effects of climate change represent a major risk to the sector's stability and growth.
In the face of the risks that our farmers and the agricultural business confront, tailored insurance solutions emerge as a strategic instrument. Specifically customised solutions, as compared to general insurance techniques, recognise the distinct risks associated with different crops and regions. Understanding the complex nature of agriculture in various climatic zones allows insurers to build policies that meet the real risks farmers face, creating a more resilient and sustainable agricultural industry.
The concept of Blended Insurance Products provides a viable option in the development of custom solutions. By combining traditional insurance models with cutting-edge technology like weather indices and satellite data, insurers can improve the accuracy of risk assessment in the agriculture industry. This new method provides a better representation of the actual risks faced by farmers, allowing for a simplified claims procedure that provides prompt assistance when it counts the most.
Different crops require different levels of care and protection. Recognising this, tailored insurance products enable a unique approach to coverage. Each component of the sector provides its own set of challenges, from huge fields of staple grains to specific production of high-value horticultural crops.
By tailoring insurance policies to individual crops, insurers ensure that coverage is linked with the details of its production, enabling a more inclusive and effective risk management system.
Traditional insurance plans often adhere to a standardised model, which may not adequately represent the actual worth of crops in different places. Tailored solutions overcome this constraint by allowing for a more precise calculation of the sum insured.This guarantees that the insured is adequately compensated for the actual value of their crops, instilling trust in the insurance process.
Short-term insurance policies are another aspect of specialised solutions that respond to agriculture's dynamic character. Certain crops have shorter cultivation periods, and traditional insurance plans with longer tenures may not adequately cover the risks during these shorter cycles.Offering insurance with flexible durations guarantees that the insured is protected precisely when they need it, reducing financial constraints during non-cultivation seasons.
Tailored insurance solutions reflect our dedication to creating a resilient and sustainable agriculture industry. The need for such solutions is a strategic necessity to maintain the stability, development, and sustainability of an industry that feeds our nation. Let us embark on a journey where every facet of the agricultural industry is safeguarded, every crop is protected, and our agricultural landscape thrives against the unpredictable whims of nature.
(Rohit Boda, Group Managing Director, J.B. Boda Group)