Agri insurance gains ground as farmers get climate compensation

Yusuf Ali, a farmer from Thakurgaon Sadar upazila, insured three bighas of his potato field for 50 days. He paid a premium of Tk3,600 to the insurer. Unfortunately, a cold snap significantly damaged his potato crop. However, Yusuf was shielded from the weather related loss and eventually got Tk9,237 as insurance claim without facing any hassle.

Yusuf actually cultivated 22 bighas of land. He received regular advice related to potato cultivation from the insurance company, which he applied on his whole project. In the end, he was able to avoid any big loss.

The roll-out of a long-needed insurance product to compensate for crop losses resulting from natural causes – such as hailstorm, flood, cyclones, excess rain, drought and so on – has thus come as a watershed in farmers' life, helping them continue to bank on farming to make a living.

Under "Surokkha" project taken up by Syngenta Foundation in September 2018, the introduction of at least 19 crop insurance products commercially has helped many farmers to protect their crops of Aman and Boro rice, potatoes, maize and beans from natural calamities.  

In the span of only four years, the number of farmers enrolled through two insurers –  Sadharan Bima Corporation and Green Delta Insurance Company Limited – has reached 2,14,836 from a mere 1,526 in FY19, according to sources at Syngenta Foundation and insurance companies.

Insured farmers get weather forecasting, early warning, and agro-advisory services over the phone every week.  When it comes to an insurance settlement, they do not have to file a claim, rather the process gets done automatically. 

A farmer is entitled to claim compensation from their insurers when certain climatic tipping points are reached. For example, as per the terms of the insurance policy, they can claim compensation if the temperature stays below 10 degree Celsius for 72 hours in a row and the percentage of humidity is more than 85%.

"Such weather conditions affect potato production and that is why I got compensation," Yusuf informed.

The Surokkha project is funded by the Swiss Embassy in Bangladesh and it is co-financed and implemented by Syngenta Foundation for Sustainable Agriculture, while the project is being managed by Swisscontact. The project is being implemented with a view to promoting risk mitigation measures for climate change adaptation.

The insurance programme is now running in 64 upazilas of 16 districts.

As distribution and strategic partners, Brac, Syngenta Bangladesh Limited, Eco-Social Development Organisation, Gram Unnayan Karma, GBK Enterprise, and EJAB Agro limited are providing support in distributing and administering insurance products as the insurance companies do not have adequate manpower at the field level.

Ali Tareque Parvez, team leader of Agriculture Insurance at Microfinance, Brac, said, "We mainly work with microfinance. For this reason, we also offer insurance products to those who take agricultural loans from us."

Md Farhad Zamil, country director of Syngenta Foundation for Sustainable Agriculture in Bangladesh, said since 2016, the foundation has been working to develop a crop insurance market to increase farmers' resilience against climate shocks in crop production.

"Different public and private sector partners are with us to support smallholders' farmers in developing feasible and affordable weather index crop insurance products, on-time distribution, other embedded services availability, and payout distribution, etc," he also said, adding,  "This has been just started, and we know that we have a lot to achieve, but these numbers make us confident to scale it up to the entire Bangladesh," 

The number of farmers insured on potatoes was 92,616, while it was 77,539 on Aman paddy, 42,174 on Boro paddy, 2,347 on maize and 107 on beans. 

Shubasish Barua, head of Impact Business and EVP at Green Delta, said they have been trying to enrol farmers with crop insurance since 2013. In 2015, they piloted it with the assistance of IFC, a member of the World Bank Group. 

"Later, we launched insurance products commercially and now are working with Syngenta Foundation. We have more than two lakh clients, including in the foundation and outside," he added.

Free of cost agro-advisory services 

Rikta Rani, another farmer from Thakurgaon Sadar upazila, has her crops of potatoes, paddy and maize insured for the last three years. 

This year, she purchased insurance products on 15 decimals of potato, five decimals of maize and five decimals of Boro paddy fields. 

Rikta told TBS, "We get a phone call from a hotline number every Sunday when we get our croplands insured. We are informed on how to take care of crops and what fertilisers or pesticides we need to apply. We also get rain forecasts and we take necessary precautions. 

Referring to a two-day rainfall in February, she said they got the rain forecast beforehand and were advised to cut a drain inside potato fields so that rainwater did not accumulate.

"The advice paid off and there was no damage to potato plants," Rikta said.

Syngenta Foundation says there is a hotline number for various agro advisory services provided over phone every week. Again, if someone calls that number, their phone call is cut off and called back from the number.  Farmers get suggestions for adopting a climate-friendly farming system.

Many people get insured only to get agriculture-related services over the phone which is benefiting them greatly in crop production, it adds.

Weather information is also being collected from the meteorological department and satellite.

How insurance products are made

Late blight, a disease caused by fungal infections, accounts for a 30% loss in protato yield. The risk of this fungal infection arises because of high humidity, fog and temperature variation. To address this risk, crop insurance products based on the weather index have been developed.

Considering the time of potato seed plantation, a 32-day insurance product called "Agam Bima", was created. The estimated cost of potato cultivation on a bigha (33 decimals) of land is Tk20,000. To get this insurance coverage, a farmer needs to pay a premium at a rate of 5-6%. 

An insured farmer will be eligible to claim a compensation that ranges between 10% and 60% if the sun does not show owing to fog and other reasons for three hours or less for three or seven or 15 days in a row in the 32-day period.

In the case of paddy, there are agricultural insurance products based on excess rainfall or temperature. If it rains more than the prescribed limit or high temperature lingers for a certain period, the policyholder can make an insurance claim. Different products have different expiration dates.

The automatic settlement of insurance claims

For insurance settlement, insured farmers do not have to file a claim or contact anyone as such crop insurance products are based on weather index. Everything is recorded. In the last four years, around 40,000 farmers received compensations amounting to Tk20 lakh against their claims. 

Green Delta's Shubasish Barua said, "Here is the beauty of crop Insurance. Everything is fixed. Weather data tells it all. When any crops suffer nature-caused damages, we settle claims on the basis of data of that time."