This study explores the potential and feasibility of agricultural insurance at the meso-level, which covers risk-aggregators such as banks, MFIs, and agribusinesses.
Background
In India, government bodies play a proactive role in providing insurance cover to the agricultural sector, primarily through highly subsidized micro-insurance schemes such as National Crop Insurance Programme, PMFBY and Livestock insurance. With the COVID-19 crisis and the subsequent lockdown, agriculture now faces an extremely challenging and uncertain season. Heavy reliance on credit institutions and an uncertain crop season result in an increase of defaulters, putting financial institutions at risk of non-recovery of these loans. Mitigating such risks thus calls for innovative measures to rectify the adverse impact on relevant stakeholders. This study seeks to explore the potential of meso-level insurance, which covers ‘risk-aggregators’ such as banks, microfinance institutions, or agribusinesses in addressing the limitations in the current model.
Approach
A detailed stakeholder mapping exercise was undertaken to identify key stakeholders in the insurance landscape in India, across these four main categories: Regulators, Facilitators, Implementers and Beneficiaries. Following this exercise, a desk review of academic and research literature and documentation on meso-insurance products globally was undertaken. This was complemented with in-depth interviews with key stakeholders.
Implications
Results from this study will aid in understanding the feasibility and potential for this alternative form of insurance in Indian agriculture. Findings from the study will also contribute to identifying key design delivery principles for creating a viable and sustainable value proposition – from the point of providers as well as the final beneficiary, i.e. farmers.