Mutual crop insurance pilot - 1

• First of its kind in India
• Period: 1st August 2006 – 31st December 2006
• Farmers’ workshops for designing the crop mutual product
• DRFI - Multiple phase policy for rain fed cotton
• Rain gauge at villages and RF was measured daily at 08.00am
• Sum insured Rs. 3000 (75 USD) per acre
• Premium Rs. 300 (7.5 USD) per acre
• Data collection, analysis and claim was settled in January 2007
• Payment in consultation with farmers and DHAN People Mutuals
• Stop loss safety net construction with the People

Mutuals and Eureko Re DHAN Foundation
Evaluation and Learning of pilot – 1.

• Payments below technical reserve
• Farmers satisfied with amount and fastness of settlement
• People Mutuals satisfied with building of reserve stemming from the remaining     premium
• Expansion of pilot to other villages and three other types of crops
• Piloting of indemnification based crop insurance

DHAN Foundation -Mutual crop insurance pilot - 2

• Damage by Red Hairy Caterpillar is a recurring problem in cotton and black gram Control of this pest is beyond the power of individual farmers and so once the infestation starts there is no way to control it
• This is an independent risk across villages
• The damage could be specific to villages; even specific to few farms
• On the one side there is need for collective preventive action and on the other side there is clear need for sharing the risks across villages
• There is requirement for intensive monitoring which is feasible through Mutual Insurance Committee
• The mainstream insurance companies do not offer such products

DHAN Foundation
Design process pilot – 2 .

• Premium was fixed based on the historical data on occurrence of pest
• Implemented with the support of Mutual Insurance committee and an exclusive field staff
• Marking of the insured plot is done in the beginning
• Periodical monitoring by committee members and the field staff
• Summer ploughing, a pest preventive measure , is also taken into account in the design of the product; thereby encouraged crop rotation
• Safety net construction with support of People

 Mutuals and Eureko Re DHAN Foundation
Mutual crop insurance pilot - 3
Period: July – October 2007

• Indemnification of loss of income from groundnut crop amounting to Rs.525 (13 USD) to 2500 (63 USD) per acre which is occurring twice in 5 years.
• Indemnification based on the actual income loss to the maximum of Rs.2000 (50 USD) with a premium of Rs.500 (12.5 USD) per acre
• Sample yield measurement in all the insured fields
• Current year farm gate price is used for calculation of crop income
• Separate notebook for recording the crop particulars and regular monitoring by the MIC
• No compensation for the human negligence

DHAN Foundation Result and Learning from Pilot -3 .

• Very good yield in the first sown crop in all the villages
• In the second sown crop, average yield in most of the villages and poor yield in very few villages
• Good market price for the ground nut
• Compensated the affected farmers which works out only 13 per cent of the premium paid
• This crop mutual was possible through farmers’ group and was monitored day by day by the Mutual Insurance Committee

DHAN Foundation Way Forward for Crop Mutuals.

• Awareness on crop mutuals to cover larger area
• Farmers workshops for designing better crop mutual products for each crop
• Understanding site specific problems and designing products against each problem of different crops
• Community mobilisation, MIC formation and regular monitoring
• Frequent meetings and recording the observations
• Government support for the crop mutuals to build the solvency fund and for the back up guarantee / reinsurance
• Including the crop mutuals as a component in all the agriculture development schemes such as NWDPRA

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