Crop insurance helping farmers weather storm
Crop insurance is promising to be a roaring success among Bangladesh's climatically vulnerable farmers going by the oversubscription of the pilot project.
Introduced in March 2014 by Sadharan Bima Corporation with financing from the Asian Development Bank, a total of 6,772 marginal farmers signed up for the Weather Index Based Crop Insurance against the target of 6,000.
Crop insurance is an insurance package designed for farmers to protect them from crop losses due to natural disasters such as hail, drought, floods and so on.
Farmers in Bangladesh are vulnerable to the vagaries of weather as climate change makes the country highly susceptible to floods and tropical cyclones. But they cannot get protection because traditional insurers have been unable to offer suitable crop insurance schemes.
The ADB-administered programme allows a farmer to claim compensation from his/her insurer when certain climatic trigger points are hit, such as cyclone or tropical storm in a given area hits a specified magnitude or when rainfall rises above or drops a certain level.
Having this kind of cover would give farmers the ability to continue to plan and save for the longer term even if their harvests are suddenly and arbitrarily destroyed by bad weather, the ADB said.
A new weather index in conjunction with the Bangladesh Meteorological Department was generated using weather data for the past 25-30 years.
For the pilot, drought-prone Rajshahi, flood-prone Sirajgonj and cyclone-prone Noakhali were selected. Some 20 automated weather observation machines were installed on the roofs of different upazila parishad buildings.
The pilot programme will end on June 30 this year, and based on its inferences the government will decide whether it will roll out crop insurance on a nationwide basis.
The project cost Tk 21.34 crore, of which Tk 16.38 crore was provided by the ADB and rest by the government.
SBC organised a workshop yesterday to chalk out the draft regulatory framework for weather-based crop insurance. Crop insurance is immensely popular in India, Sri Lanka, Pakistan and Mexico, said Gokul Chand Das, member of the Insurance Development and Regulatory Authority.
He went on to suggest SBC to visit the countries where crop insurance is functioning successfully to gather in-depth knowledge on the product.
“It is a very complex product, so learning and awareness is needed among the concerned parties,” said Arup Chatterjee, principal financial sector specialist of ADB's Sustainable Development and Climate Change department.
A strong database of farm households is needed to develop the product design and set premium, he said, while calling for a strong value chain to promote the product.
SBC has so far paid insurance claim of Tk 17.55 lakh against aman and potato harvests in Rajshahi and Noakhali districts.