Scaling Cattle Insurance through Digital Solutions

The tattooing, hot/cold branding and brass ear tagging methods are obsolete. Affixing Polyurethane ear tag and injectable RFID requires skilled professionals and don't complement scale in a foolproof manner. Moreover, lack of tamper-proof, scalable, unique digital identity for bovines is one of the significant reasons for moral hazard, resulting in a higher loss ratio for livestock insurers.

- Dr Ajay Verma

The cattle population in India, as per the latest census, is 303.7 million, which includes cows and buffaloes. India is #1 in cattle population and also the largest milk producer in the world. Indian Government unveiled National Digital Livestock Mission at National Dairy Development Board, Anand, in 2021. A digital platform is prepared jointly by the Department of Animal Husbandry and Dairying and NDDB.

The aim is to create a farmer-centric, technology-enabled ecosystem where the farmers can realize better income through livestock activities with the correct information. The farmers will have a unique cattle identity through permanent identification to keep track of health, breeding, traceability, insurance, and disease control.

Trigger for Innovation:

Insurance Industry has been in the cattle insurance business for nearly five decades in India. But today, the penetration of cattle insurance has been less than 5% of the cattle population in India, despite the support and push from the state/central Governments, and almost all private and public sector insurance companies of India have cattle insurance products in their product portfolio. Moreover, in general, 4-5% premium rates per annum are charged for cattle insurance by most insurers which are relatively very high compared to various other insurance products.

The major challenge that emerged from talking to insurers is moral hazard, lack of tools to address adverse selection and high loss ratio. Although insurers attempted all possible measures, nothing has worked well and up to the satisfaction to build confidence in insurers having a foolproof solution. Many instances of misuse, and manipulation of identification system are observed in the field.