2. What is Insurance ?
• According to Word Web Dictionary
“Promise of reimbursement in the case of loss;
paid to people or companies so concerned about
hazards that they have made prepayments to an
3. What is Crop Insurance ?
• Crop insurance is an insurance arrangement
aiming at mitigating the financial losses suffered
by the farmers due to damage and destruction of
their crops as a result of various production
4. Why crop insurance in necessary ?
• Fluctuation of weather
• Pest & diseases
• Quality of inputs
• Market prices
5. Objectives of Crop Insurance
• To provide insurance coverage and financial support to
the farmers in the event of prevented sowing & failure of
any of the notified crop as a result of natural calamities,
pests & diseases
• To encourage the farmers to adopt progressive farming
practices, high value in-puts and higher technology in
• To help stabilize farm incomes, particularly in disaster
6. Advantages of crop insurance
• Can avoid the loose incurred due to vagaries of weather
• Pest and Diseases
• Market Prices
• Other unpreventable losses.
• Increasing the repayment capacity of debtor.
• Avoiding the risk of non payment in events of crop damage
• Reducing the payment of relief package.
• A Prosperous, stable and happy nation.Government
7. Actuarial: Essentially this is a branch of statistics, dealing with the
probabilities of an event occurring.
Catastrophe: A severe, sudden and unexpected disaster which results in
Claim: The application for indemnity (payment) after an insured event has
Gross Premium/ Premium rate: The premium paid by the insured, which is
aggregate of components including risk premium plus operating
expenses, commissions, reserves and other expenses paid by the insured.
Indemnity: It is the compensation payable to the insured farmers for a
crop loss resulted by the insured causes. It is determined by the quantity
by which the yield falls short of the coverage
8. Guaranteed Yield: The expected physical yield of a crop
stated in the insurance policy, against which actual yields
will be compared when adjusting any losses
Loss Cost: Claims expressed as a percentage of the total sum
insured or total liability
Premium: This is the fixed amount that an insured or farmer
pays to the insurance agency this is also called as average
annual loss cost. The premium rate is fixed or determined
based on the variations in yield during past years.
Pure premium rate: It is the definite amount payable to the
insurer by the insured for the insurance protection offered
Insured: Insured is the party (farmer) who as to be
indemnified by the insurance agency by the insurer when is
incurred due to insured causes.
9. Different schemes of crop insurance
• 1970- Expert committee on Crop insurance appointed by GOI
• 1973- GIC (General Insurance Company) set up by GOI to do all types of insurance
business throughout nation with four Subsidiaries
• 1985-Comprehensive Crop insurance Scheme (CCIS) by GIC started
• 1999-- NAIS (National Agricultural Insurance Scheme) launched by GOI
• 1999-2000- Seed Crop Insurance introduced for 11 crops in 10 states
• 2007– WBCIS (Weather Based Crop Insurance Scheme)
• 2010-MNAIS was launched. It is modified version of NAIS. It was initially launched in 50
districts of India
• 2004 - FIIs (Farm Income Insurance scheme) inaugurated by MOA and AIC jointly
11. The Leading Technology for Modeling
• AIR Worldwide scientists addressed these complexities
when they developed the AIR Multi-peril Crop Loss
• The AIR Multi-peril Crop Insurance Model meets the
demand for a more scientific approach to analyzing crop
insurance and reinsurance programs.
• Today, all leading crop reinsurers are using the model
for assessing the potential gains and losses to their
portfolio and for pricing. Crop insurers are using the
model for improved fund allocation and risk
Notas del editor
Insurance is a federal subject in India. It is a subject matter of solicitation. The legislations that deal with insurance business in India are Insurance Act, 1938 and Insurance Regulatory & Development Authority Act (IRDA), 1999.
Insurance is defined as is a form of risk management primarily used to hedge against unforeseen risks of contingent losses.
Another definition for Insurance is the equitable transfer of the risks from the possibility of occurrence of losses, from one entity to another (or host of others), by the method of diversification in exchange for a premium.
As a result the ramifications of a large and devastating loss can be minimized to a great extent.
An Insurer is a company designing, promoting and selling the insurance products and services amongst the public.
An insured or policyholder is the person or entity purchasing the insurance products and services.
Risk management, the practice of appraising and controlling everpervading risks, has evolved as a discrete field of study and practice. The study of Insurance incorporates the discipline of Risk Management which acts as a driving force.
WBCIS- While due to adverse weather conditions, crop may not suffer the loose of yield but there can be lose in the quality of produce.
The model employs crop yield-weather relationships at county resolution and fits robust distributions that take into account the impact of weather variability on crop production.
Critical to the robustness of the model is the detrending methodology developed at AIR, which effectively isolates the weather impact from changes in technology on crop yields.
That methodology relies on AIR’s Agricultural Weather Index™, or AWI™, a county- and crop-specific weather index that leverages vast amounts of high resolution weather data that AIR ingests daily to support its catastrophe models. How good is the AWI? So good that AIR’s agriculture risk modeling team has finished first in the FACT Sim Futures and Options Trading Competition in four of the last five years.