Crop Insurance in Developing Countries

In 2005, gross premium in India amounted to €95m. Crop insurance started there in 1972 and then developed in different phases, tte National Agriculture Insurance Scheme (NAIS by AIC) has provided insurance products in all states and to all farmers since 1999. tte main covers are yield guarantee and area yield, and a pilot project is under way for a product with a meteorological trigger, ttirty different crops can be insured during Kharif(SW monsoon, July-October), 25 crops during Rabi (winter months, only in the irrigated areas). In 2004/05, nearly 18 million farmers had bought insurance cover, 4 million farmers received indemnification.

Emerging markets are characterised by special circumstances with regard to agricultural insurance. Many of them provide dual agricultural structures, i.e. small-scale farms with limited access to technology and markets and modern farms. Governments have limited financial capacity to support agricultural insurance programmes and the lack of an insurance tradition makes the marketing of insurance products difficult. Small-scale farms hardly have any chance to have access to the traditional insurance market. A solution for them may be microinsurance systems especially designed for agriculture, ttese are based on low premiums and correspondingly low indemnification in the event of loss or damage, but they enable farmers to restore their basic business, i.e. to buy seeds for the next growing season.

Munich Re and the Munich Re Foundation, along with the traditional agricultural insurance sector, have started several initiatives especially for developing countries, tte Munich Re Foundation has organised several conferences on microinsurance over the last two years and recently published a 600-page book on this. In 2007, another international microinsurance conference is to be held in Mumbai. In 2005, Munich Re launched the Munich Climate Insurance Initiative (MCII): a group of experts from the World Bank, NGOs, science and the insurance industry working on new insurance solutions to cover increasing loss and damage from weather-related disasters in developing countries, ttey are working in close contact with the negotiations of a Post-Kyoto Protocol under the umbrella of the UN Framework Convention on Climate Change.

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