INDIA’S FIRST PARAMETRIC INSURANCE FOR FISH FARMERS LAUNCHED IN ASSAM
Context:
India has introduced its first parametric insurance specifically for inland fish farmers in Assam, aiming to protect their income from unforeseen natural disasters and risks.
The Assam Rural Infrastructure and Agricultural Services (ARIAS) Society, in collaboration with the State fishery department and the Absolute DigiSafe consortium, has initiated this program to offer innovative financial solutions like loans, insurance, and customized financial services to the fish farming community.
Parametric insurance:
This insurance policy compensates policyholders when a predefined event occurs, paying a predetermined amount based on the event's severity rather than the actual loss incurred.
The inaugural offering was introduced in Darrang and Kamrup, covering approximately 1,100 farmers against the financial impacts of low winter temperatures.
Farmers paid a premium of about 4-5% of their coverage amount.
Cold weather can decrease production, and claims are automatically initiated when temperatures drop below a specified threshold in these areas, with settlements processed within a month.
Future plans include developing insurance products for floods, drought, excess rainfall, and other risks, initially targeting farmers in flood-susceptible districts.
Farmers with ponds of at least one bigha in size will qualify for these insurance plans.
Advantages of Parametric Insurance:
Quick Payments: Fast payouts based on predefined events, no lengthy damage assessments needed.
Clear Terms: Straightforward conditions for payouts, offering transparency.
Broad Coverage: Covers economic losses, not just physical damage.
Fills Gaps: Supplements areas not covered by traditional insurance.
Cost-Effective: Potentially lower premiums due to reduced administrative costs.
Promotes Mitigation: Encourages proactive risk management measures.
Innovative: Offers protection against emerging and climate-related risks.
Improves Recovery: Helps stabilize finances quickly after a disaster, aiding recovery.
Other Initiatives focused on Agri-credit (KCC & MISS) and crop insurance (PMFBY/RWBCIS):
Objective: To enhance financial inclusion in the agriculture sector.
Kisan Rin Portal (KRP):
This digital platform aims to transform how credit services are accessed under the Kisan Credit Card Scheme (KCC) by offering a detailed summary of farmer profiles and loan distribution information, along with facilitating a smooth linkage with banks.
It also intends to assist farmers in obtaining subsidized agricultural loans through the Modified Interest Subvention Scheme (MISS), making the application and receipt process more efficient.
Pradhan Mantri Fasal Bima Yojana (PMFBY) :
It offers a comprehensive insurance cover against crop failure and was introduced in 2016.
The Ministry of Agriculture is in charge of overseeing the program, which is carried out by general insurance firms with an employee network.
For loanee farmers who are using a KCC account or Crop Loan to finance notified crops, the program is required; for others, it is optional.
Restructured Weather Based Crop Insurance Scheme (RWBCIS)
It was introduced in 2016 with the aim of easing the financial burden on the covered farmers in the event of crop loss due to unfavourable weather conditions.
While RWBCIS employs weather parameters as a proxy for crop yields in paying the cultivators for assessed crop losses, PMFBY is based on yield.
After the risk period ends, all regular claims are reviewed and paid within 45 days.
The Ministry of Agriculture oversees the program’s administration.
There are some five lakh fish farmers in the State. Despite the importance of the fishery sector, fish farmers, who had been bearing the brunt of natural calamities, particularly floods, encounter difficulties in accessing crucial financial services necessary for sustaining and expanding their businesses. The absence of essential insurance products exposes them to significant vulnerability, and the lack of access to lending options hinders their ability to grow. Hence support from the government through insurance can help them tackle their challenges which ultimately will contribute to the growth of the society.
