New era begins in livestock insurance
Green Delta Insurance and Brac Bank yesterday rolled out the country’s first-ever livestock insurance for cattle farmers on a pilot basis, a development that can go on to become a game changer for the cattle industry.
The loan-based product, which is backed by insurance, will be piloted for one year on 400 farmers across the country.
Disability, death and pregnancy-related complexities of cattle would be under insurance coverage and premium of the insurance would be 3 percent of the assumed value of the livestock.
Farmers who take loans from Brac Bank for their livestock would be able to take the insurance coverage.
“Through the pilot project, we will get ideas on how to run it in a sustainable way,” said Farzana Chowdhury, chief executive officer of Green Delta Insurance.
She acknowledged there is a negative perception among people about insurers’ claim settlement.
“We want to remove the negative perception and stand with the agricultural sector with this product,” she said, adding that their experience of weather-based crop insurance will be helpful in designing the product.
Green Delta began a weather index-based crop insurance in 2016. It has been insuring around 10,000 farmers in several crops and settled claims to 2,200 farmers for unseasonal excess rainfall, cyclone signal and cold spell on different seasonal crops.
Cattle insurance was first launched in 1970's by Sadharan Bima Corporation but it was nipped in the bud due to the absence of technology, said Gokul Chand Das, member of the Insurance Development and Regulatory Authority.
“Sadharan Bima did not have this technology, so claim settlement system was complex,” he said, adding that all the cattle will be traced by an app.
The insurer will hang a chip around the neck of the cattle. The chip will provide a host of information including health data and picture of the cattle.
“Claim settlement would be easier with the new technology.”
Das recommends articulating the conditions for insurance coverage in a lucid manner to farmers. “Only then will it be a trustworthy product,” he added.
“A number of educated people is coming to the profession of rearing livestock nowadays, so our livestock sector is expanding day by day,” said Md Ashraf Ali Khan Khasru, state minister for fisheries and livestock.
In fiscal 2017-18, the total number of livestock was 5.51 crore, up from 5.47 crore a year earlier, according to data from the fisheries and livestock ministry.
The sector needs insurance support to grow more because when a cow or goat dies the farmer gets into financial problems, Khan said.
With the insurance policy many educated young people will be encouraged to go for cattle rearing as risks would be mitigated.
The minister went on to invite other insurers to come up with such a policy and urged banks to lower the interest rate of loans to farmers. Selim RF Hussain, managing director of Brac Bank, said risks of both farmers and banks will come down due to the insurance.
“The scheme will also encourage new entrepreneurs,” he added. Afsana Islam, deputy team leader of growth and private sector development of DFID Bangladesh, the British government’s arm for international development, and Shykh Seraj, founder director and head of news of Channel i, also spoke at the event.