This is a detailed landscape assessment of agricultural insurance in India, with a focus on crop and livestock insurance, providing a brief overview of the current landscape of products available, details on take-up and usage of crop and livestock insurance and the barriers faced on the supply and demand sides.
Agricultural insurance form a crucial part of the risk management in India, a country highly prone to both natural and man-made disasters. However, information related to crop and livestock insurance in India is presently dispersed and deficient in nature. This study aims to describe the general state of the crop and live insurance sectors, identify the key players in the sector and their business models, and the challenges that hamper uptake of insurance among rural poor communities at a larger scale. Results from the study will be used to devise recommendations to the various stakeholders.
A combination of desk-based and qualitative research (personal and telephonic interviews) methods were used to inform the following key aspects of the study:
a) Evolution of the micro-insurance sector in India and assessment of existing crop and livestock insurance schemes
b) Analysis of the existing crop and livestock insurance companies offering products for the rural poor
c) Analysis of insurance distribution channels/models
d) Analysis of resilience building activities
e) Assess perceptions and attitudes regarding agricultural insurance at the level of key supply-side and demand-side stakeholders
There are a number of key issues, both on the supply and demand side, that hinder the growth of crop and livestock insurance in India. While some evidence to the efficacy of such insurance products is available, major barriers such as the high costs, and challenges in implementation continue to persist. Additionally crop and livestock insurance have been presented and sold independent of other products and services – a strategy that needs to be given considerable thought, going forward.
Moreover, a disproportionate amount of importance is given to crop insurance visà-vis livestock insurance by both the government, and insurance companies in India. No risk management, or resilience building strategy in agriculture can succeed in the long term without adequately safeguarding livestock, given the high-value potential of livestock assets.
Crop and livestock insurance are extremely important risk management strategies. However, they are only one of several strategies that farmers in India employ in order to manage and mitigate risk. Findings from this study point towards clear gaps in risks covered by crop and livestock insurance, in addition to a very fragmented landscape for risk management services and products available to the farmer. Notably from a policy perspective, livestock insurance does not garner adequate attention, forming a key barrier to the success of longer-term risk management and resilience building strategies in agriculture. The future of the agri-insurance business depends on the ability of insurers to package their products in a manner that is far more appealing, impactful, and relevant to the daily struggles of the farmers.