Crop insurance gains popularity
Crop insurance, being piloted in three districts, is gaining popularity among farmers as it helps ride out crop losses from natural disasters.
The Weather Index Based Crop Insurance pilot project was rolled out in Rajshahi, Sirajganj and Noakhali by Sadharan Bima Corporation (SBC) in March 2014.
Of the Tk 21.34 crore project cost, Asian Development Bank provided Tk 16.38 crore while the government bore the rest.
SBC settled claims of Tk 17.54 lakh against 5,399 policies during the piloting's first three phases, each lasting for a season of some three to four months.
But during the fourth phase, which ended in May, the number of policyholders rose by over 25 percent to 6,772 and claims doubled to Tk 33 lakh.
Farmers have been mainly attracted by the 50 percent subsidy on the premium and for this the project has become a success, said the project director, Wasiful Hoq.
Farmers paid premiums ranging from Tk 200 to Tk 300 for coverage of up to Tk 1,800, he said.
The subsidy is a part of the project cost and SBC is settling the claims.
Experts say government subsidy is a prerequisite to make the product viable nationwide and support the agriculture sector.
Hoq said private companies would not be interested in promoting the product because the amount claimed would be higher than the premium paid due to frequent natural disasters.
At present, the insurance provides coverage for crop losses inflicted by natural disasters such as hails, droughts and floods.
It, however, does not cover damages caused by flash floods as the weather index cannot measure its intensity, hence, the damage.
Farmers in Bangladesh are vulnerable to the vagaries of weather while climate change has made the country even more susceptible to floods and tropical cyclones.
But farmers do not get protection as traditional insurers have been unable to offer suitable crop insurance schemes.
Crop insurance scheme is very popular in India, where the government pays 70 percent of the premium as subsidy. Sri Lanka, Indonesia, Thailand and the Philippines have also introduced subsidised crop insurance programmes.
In Bangladesh, crop insurance was introduced in 1989 but it did not continue after 1995 due to manipulation by both insurers and policyholders in loss measurement.
There was no scientific method to measure the adversity of weather, which eventually led to the failure of the scheme.
But now there is huge potential for crop insurance because the loss is measured in a scientific method, said Hoq, also a deputy general manager of SBC.
Under the ongoing pilot project, 20 automated machines for observing the weather have been installed on the roofs of upazila parishad buildings.
Crop insurance is not becoming successful because the cost is high for farmers, said Khondkar Ibrahim Khaled, a former deputy governor of the central bank.
A government initiative will be needed to reduce the premium cost for farmers, he said at a programme at the Bangladesh Institute of Bank Management in Dhaka recently.
The fifth phase of the piloting ends in December this year. The government will take a decision on whether it would roll out the product across the country based on the success of the project and recommendations.
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