AgroSpectrum - AgroSpectrum India June 2024

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Offsetting Extreme Weather Impact with Tech-Driven Insurance India, like many other countries, faces challenges such as weather fluctuations, pest attacks, erratic rainfall, and humidity, affecting agricultural produce. These factors lead to lower yields and income for farmers each year. Between 2015 and 2021, India lost 33.9 million hectares of cropped area due to floods and excess rains and 35 million hectares due to drought. To address this, the government of India is increasingly considering “parametric” insurance or weather-based index insurance, which relies on predefined parameters to trigger a payout. This helps overcome the shortcomings of indemnity-based insurance by directly linking the compensation to specific parameters rather than farmers’ actual loss. The results are reduced transaction costs, greater transparency, and a faster processing time. Weather-based index insurance can rely on remotely sensed weather data to determine a threshold level of weather variables. Both the government and private insurers are recognising the potential of index-based insurance. Collaborative efforts and technology startups specialising in agri-tech are leading the way in fine-tuning and promoting these innovative insurance solutions. In an era of digitisation, technology is pivotal in refining index-based insurance. Satellite data aids accurate monitoring of weather patterns, while AI algorithms can help predict and set appropriate indices. Let’s explore how tech-driven crop insurance and the leveraging of AI in insurance payouts is poised to disrupt the crop insurance landscape in India.