Crop insurance as a concept for risk management in agriculture has emerged in India since the turn of the twentieth century. From concept to actual operation, it has evolved sporadically but continued through the twentieth century and is ever changing in terms of scope, methodologies and practices. While the basic concept of providing cover to the crops against untoward perils undergo periodical changes it is necessary to mention that  the ‘area approach’ scheme of today was introduced as a Rain Insurance scheme for farmers in 1915 by Shri J.S. Chakravarthi  of Mysore State with the view to insuring them against drought.

Crop insurance programme underwent more changes in the post-independence period. In October 1965, the Government of India decided to introduce a Crop Insurance draft Bill and a Model Scheme for the States to implement if they so desire. For over two decades, there were several rounds of debates and discussions on crop insurance. In the beginning of the seventy’s, the then newly set-up General Insurance Corporation of India took over the experimental scheme for H-4 cotton in Gujarat and subsequently included Groundnut, Wheat and Potato and implemented in the states of Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh, Karnataka and West Bengal.  The insurance programme was tried as ‘Area apporach’ scheme on pilot basis in 1979 under the name PCIS and from FY 1985-86 as Comprehensive Crop Insurance Scheme by GOI with active participation by States.

From Rabi 1999, the National Agricultural Insurance Scheme (NAIS) replaced the CCIS. Agriculture Insurance Company of India Ltd as the “Implementing Agency” implements NAIS as the flagship yield based crop insurance program of the Government by giving protection to millions of farmers since 2003.  Starting operations with a single product (NAIS) a decade ago, AIC has developed and marketed several other products since then to the benefit of the Indian farming community.  Today, AIC is the world’s largest crop insurer in terms of the number of farmers covered under its different crop insurance programmes. The World looks at India as pioneers in developing innovative crop insurance products.  

Crop insurance programme underwent more changes in the post-independence period. In October 1965, the Government of India decided to introduce a Crop Insurance draft Bill and a Model Scheme for the States to implement if they so desire. For over two decades, there were several rounds of debates and discussions on crop insurance. In the beginning of the seventy’s, the then newly set-up General Insurance Corporation of India took over the experimental scheme for H-4 cotton in Gujarat and subsequently included Groundnut, Wheat and Potato and implemented in the states of Gujarat, Maharashtra, Tamil Nadu, Andhra Pradesh, Karnataka and West Bengal.  The insurance programme was tried as ‘Area apporach’ scheme on pilot basis in 1979 under the name PCIS and from FY 1985-86 as Comprehensive Crop Insurance Scheme by GOI with active participation by States.  From Rabi 1999, the National Agricultural Insurance Scheme (NAIS) replaced the CCIS. Agriculture Insurance Company of India Ltd as the “Implementing Agency” implements NAIS as the flagship yield based crop insurance program of the Government by giving protection to millions of farmers since 2003.  Starting operations with a single product (NAIS) a decade ago, AIC has developed and marketed several other products since then to the benefit of the Indian farming community.  Today, AIC is the world’s largest crop insurer in terms of the number of farmers covered under its different crop insurance programmes. The World looks at India as pioneers in developing innovative crop insurance products.  

Besides NAIS, Weather Based Crop Insurance Scheme (WBCIS), introduced from Kharif 2007 based on actuarial rates of premium intends to provide insurance protection to farmers against adverse weather incidence such as deficit and excess rainfall, long dry spells, fluctuations in minimum and/or maximum temperature, relative humidity, wind speed etc. that affect the crop production adversely. From Rabi 2010-11, AIC is also implementing the GOI approved pilot scheme viz. Modified National Agricultural Insurance Scheme (MNAIS).

A DECADE OF PROGRESS
The progress of AIC is certainly commendable at the completion of its first decade. The Company rejoices for having played an important role in the economy of the country for a decade insuring on an average 2 crore farmers every year across the country and disbursed claims worth Rs.24915 crore over the years.  The Company has taken new initiatives to serve the farming community in a better manner.
 
Remote Sensing-Based Information and Insurance for Crops in Emerging Economies (RIICE)
Remote Sensing-Based Information and Insurance for Crops in Emerging Economies (RIICE) uses Synthetic Aperture Radar technology (SAR) and crop modeling tools to gather data related to rice yield and design effective risk management solutions to support index-based crop insurance products. RIICE is expected to estimate the yields at village level far more accurately. AIC is collaborating RIICE project with GIZ, (German International Coop) Allianz Re, International Rice Research Institute (IRRI), Philippines& Tamil Nadu Agricultural University. The project is to commence during 2012-13 in two or three districts of Tamil Nadu where MNAIS is being implemented. RIICE developed village level yields are validated with Crop Cutting Experiments (CCEs) based yield estimates. This would help to move from the manual CCEs based yield estimation to technology based yield estimation, and thus, improve the accuracy of yield estimation as well as faster settlement of claims.

Terrestrial Observation and Prediction System (TOPS)
TOPS (Terrestrial Observation and Prediction System) technology, developed by National Aeronautics and Space Administration (NASA) scientists, integrates surface weather, satellite data with empirical/mechanistic models to monitor and predict crop growth profiles, crop stress and yields. In order to generate village level historical weather data of past 15 years as well as future three years, AIC commissioned a pilot in Maharashtra wherein the daily data is generated for over 30,000 villages. This data is expected to assist AIC in fine-tuning the WBCIS products, as also in minimizing the basic risk. If found feasible, TOPS could be used to supplement / complement the existing weather station network, hugely minimizing the investment in setting up weather stations.

Crop Yield Audit Systems
Currently, more than 1.2 million Crop Cutting Experiments are conducted every season to collect crop yield data used for both policy purpose and insurance purpose. AIC with assistance from the World Bank started a pilot to use GPS enabled cellular phones to geo-tag, time-stamp, record, and transmit the data on near real-time basis. The pilot commenced with deployment of 50 cellular phones in Maharashtra for Rabi 2010-11, which was extended to Rajasthan during Rabi 2011-12 by deploying additional 50 cellular phones. Re-insurers have responded positively to the initiatives, indicating the potential benefits if adopted nationally. The project is expected to (i) create and implement centralized data management system to accept incoming data for all States; (ii) develop formal data monitoring, auditing, and cleaning techniques; and (iii) provide data to insurance providers and Government in a standard format as appropriate.

Index-Plus Insurance Products
In order to capture and mitigate the hailstorm risk of apples and grapes, AIC with approval from the Government of India launched a pilot on ‘index plus’ insurance. The product gives payout based on weather deviations in case of parametric weather, and on individual loss assessment basis for hailstorm and other localized risks. The pilot is introduced during Rabi 2011-12 for apple in Shimla (HP) and for grapes in Nasik (Maharashtra).

PRODUCT DEVELOPMENT
Apart from the above, AIC is also marketing different in-house insurance products for Apple, Bio-fuel Tree/Plant, Cardamom Plant & Yield, Coffee, Grapes, Mango, and Potato Crop besides Rabi Weather Insurance, Varsha Bima/Rainfall Insurance, and Rubber Plantation Insurance. These products have been designed keeping the crop and farmers’ requirement in mind and are suitable for crop risk mitigations.

AIC is continuing its efforts to study design and fine-tune various farmer-friendly products to cater to the specific insurance needs of the farming community. The Company had made efforts to ensure that these products, while conforming to sound actuarial (commercial) principles, are also affordable to the farmers and intends to reinvent to face the challenges ahead.