Creating Resilience for Farmers Through Weather-Based Insurance

Weather is one of the most unpredictable and uncontrollable inputs for agriculture. Unseasonal heavy rains, hailstorms, spells of drought, and loss of production due to crop diseases make agricultural outputs highly volatile, resulting in fluctuating farm incomes. One way to cope with the weather risk in farming and to make farmers more resilient is by offering them risk mitigation tools to prepare them for a rainy day. 

Insurance is one such risk mitigation tool. However, the penetration of insurance in India is very low. Although the government has launched schemes like Pradhan Mantri Fasal Bima Yojana (PMFBY) to protect farmers against crop losses, the adoption of the scheme is low—only 26% of them are insured. 

Introducing Kavach

In 2022, we introduced Kavach—an integrated package solution for farmers, extending localised weather services, a chatbot solution, and a sachet weather insurance cover. It will cash out to them in case of certain predefined unfavourable weather conditions. The weather-related calamities are different for different seasons and reasons. We have defined the parameters of cash out to benefit farmers based on localised weather. Kavach was extended to 35,000+ farmers in the Rabi season and 7,900+ farmers benefited through claims in the same season. 

Kavach is available only for nurture.farm farmers across the country. They can use either reward points or UPI payments to get onboarded. The program was launched for the current Kharif season in May and by mid-July, 27,000+ farmers had enlisted with a total quantity of close to two lakh Kavach units. The parameters of insurance vary from state to state depending on historical weather data and basic risks of that region like unseasonal rainfall, excess rainfall, drought, high temperature, etc. 

Recently, we introduced a very low-cost Catastrophe Cover along with the regular Kavach. While farmers in many states enrol in PMFBY, Kavach gives them an element of choice with flexible covers, weather data and chatbot support. 

Looking ahead

At nurture.farm, we realise the issues farmers are facing and understand the current resilience solutions extended to them either by the government or any other stakeholder. One of the biggest issues with any government-backed insurance scheme is reliance on premium/ claim subsidy, which delays the benefit to farmers. Also, the insurance schemes in India are on an Area Approach basis, which means all the farmers of a particular village will get the same benefit irrespective of the losses incurred by them. While these reduce the claim assessment effort, they ignore farm-level issues, which demotivates farmers from choosing any insurance solution in the long run. nurture.farm is leaning towards offering farm-level insurance cover backed by remote sensing technology to farmers. This will be the ultimate effort towards increasing their resilience and incomes. 

Apart from insuring crops, we intend to focus on providing other personal risk mitigation solutions to farmers, starting from their health. While a lot of farmers access Ayushman Bharat and other government-backed health programs, there are many who are still ignorant about this major risk and have no risk mitigation. A study suggests that in 2018, 55 million people were pushed into poverty because of having to fund their own healthcare. Needless to say, a health insurance solution will go a long way in saving them from this tragedy. 

At nurture.farm, we realise that a successful insurance program for rural India should have three basic parameters—Simplicity, Ease of onboarding and Minimal/No documentation. This is our mantra for a successful insurance program targeted at improving farmers’ resilience. 

This article is authored by Vivek Lalan, Head of Insurance at nurture.farm