- 31 Jan
- Mayank Midha
The objective of the study is to conduct a need analysis for a weather insurance product in the Dungarpur District of Rajasthan. This includes a Client Profiling Study, identifying various factors that influence or hinder the adoption of the product and to recommend a potential partner for distribution of this product. The scope of the study is limited to the selected representative villages in the Aspur Block of the district.
The range of risks that affect the income of agricultural producers and agribusinesses is quite broad. The two predominant risks being price risk and production risk, and weather, in particular, is one of the most persistent production risks which impact all aspects of the agricultural supply chain, particularly in economies based on rain-fed agriculture and is mostly responsible for the variations in the income of the farmers. There are only a few insurance mechanisms which deal efficiently with weather risk. The traditional Area-Yield Indexed Crop insurance (NAIS) in India, an initiative of the government has been in existence for the past two decades and has been continuously criticised on a number of aspects ranging from economic, administrative and financial. Whereas the relatively new Index based weather insurance products are less susceptible to some of the problems intrinsic in traditional multi-peril crop insurance and hence have higher probability of getting accepted by the farmer communities. The demand for these insurance products by farmers in the context of rain-fed village economy is dependent on a range of different factors ranging from cultural, social, psychological and personal factors. The frequency and the intensity of the shocks faced by the farmers determine the need for the product. On the other hand affordability, previous experience and the knowledge about the product also influence demand. Product features like: risk coverage, premium, distribution of the product and even the choice of the vendor play a considerable role in affecting the demand for the product. The study also reveals that lack of knowledge about insurance products is the most common reason for not buying insurance products and surprisingly the respondents felt that affordability doesn’t act as a major hurdle in buying the product. As per the study the need for weather insurance is considerably high but this is subject to certain specific product features offered by the insurer.
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