Your search found 3 records
1 Malik, Ravinder Paul Singh; Amarnath, Giriraj. 2021. Economics of Index-based Flood Insurance (IBFI): scenario analysis and stakeholder perspectives from South Asia. Colombo, Sri Lanka: International Water Management Institute (IWMI). 34p. (IWMI Working Paper 199) [doi: https://doi.org/10.5337/2021.228]
Flooding ; Agricultural insurance ; Crop insurance ; Economic analysis ; Stakeholders ; Disaster risk management ; Farmers ; State intervention ; Flood damage ; Crop losses ; Compensation ; Subsidies ; Insurance premiums ; Cost benefit analysis ; Economic viability ; Sustainability ; Villages ; Remote sensing ; Datasets ; Models ; Developing countries ; Case studies / South Asia / India / Bihar / Katihar
(Location: IWMI HQ Call no: IWMI Record No: H050736)
(1.32 MB)
The International Water Management Institute (IWMI) has recently developed an innovative Index-based Flood Insurance (IBFI) product to facilitate the scaling of flood insurance particularly in vulnerable economies, to provide risk cover to poor farmers against crop losses that occur due to floods. While the product developed is technically very sound, the economics of such an intervention is important to ensure the large-scale acceptance and adoption of the product by different stakeholders and for its sustenance in the long term. This paper attempts at conducting an ex ante assessment of the economics of IBFI from the perspectives of the three main stakeholders: farmers, the insurance company and the government. The paper discusses the methodological challenges and data issues encountered in undertaking an economic analysis of such a product. The issues and processes involved have been empirically demonstrated using a theoretical case study based on a synthesis of information drawn from a host of sources and certain assumptions. Field-based data are now being collected and analyzed from the locations where IBFI has recently been piloted by IWMI. This will help in further refining the process of economic evaluation and identifying the experiences of different stakeholders.
2 Aheeyar, Mohamed; Samarakoon, Kalani; de Silva, Sanjiv. 2021. Bundled weather index insurance pilot for drought-affected areas in Sri Lanka: reaching marginal farmers. Colombo, Sri Lanka: International Water Management Institute (IWMI). 35p. (IWMI Working Paper 201) [doi: https://doi.org/10.5337/2021.233]
Weather index insurance ; Crop insurance ; Drought ; Pilot projects ; Farmers organizations ; Advisory services ; Awareness-raising ; Arid zones ; Climate change ; Crop losses ; Compensation ; Risk transfer ; Disaster risk reduction ; Resilience ; Decision making ; Insurance premiums ; Cost benefit analysis ; Equity ; Stakeholders ; Partnerships ; Gender ; Women ; Smallholders ; Landlessness ; Communities ; Households ; Socioeconomic environment ; Mobile phones ; Models / Sri Lanka / North Central Province / Galenbindunuwewa / Dunumadalawa
(Location: IWMI HQ Call no: IWMI Record No: H050840)
(3.07 MB)
Drought is an almost annual phenomenon in Sri Lanka, occurring at varying degrees of severity and affecting many parts of the country. These droughts cause significant damage to agriculture and other economic and social activities. This paper assesses the effectiveness of satellite-based weather Index insurance (WII) bundled with real-time climate and agronomic advisory services provided to farmers’ mobile phones. The aim is to enhance the drought resilience of diverse groups of farmers by providing solutions and strategies to extend bundled insurance products to more people and address equity issues.
In this pilot, an insurance product was introduced to farmers in a village in the North Central Dry Zone of Sri Lanka. WII products are seen as a part of the solution to reducing farmers’ risk to climate change. However, in many places, the structure of insurance schemes in the agriculture sector has failed to reach small-scale and marginal farmers who are most in need of risk transfer mechanisms. Based on a farmer survey, we extracted lessons from implementing a bundled insurance scheme as a pilot project to explore the utility of farmer organizations as an entry point for engaging different farmer groups and ensuring they can understand the WII insurance products and can make informed choices.
The survey results show that efforts made at the outset to understand contextual issues and challenges contributed to an effective product design and rollout approach. The rollout was more effective due in part to a partnership with an established local organization while adopting an aggregator model. Covid-19 mobility restrictions prevented full implementation of the rollout.
Index insurance bundled with mobile weather and agronomic advisories increased farmer resilience and reached diverse groups. Farmers emphasized that being able to assess the costs and benefits based on understanding how key elements of the product work is key to their future engagement with such products, which highlights the importance of investing in awareness raising through a blend of print, verbal and visual tools that make complex products understandable to stakeholders with low levels of literacy.
In this pilot, an insurance product was introduced to farmers in a village in the North Central Dry Zone of Sri Lanka. WII products are seen as a part of the solution to reducing farmers’ risk to climate change. However, in many places, the structure of insurance schemes in the agriculture sector has failed to reach small-scale and marginal farmers who are most in need of risk transfer mechanisms. Based on a farmer survey, we extracted lessons from implementing a bundled insurance scheme as a pilot project to explore the utility of farmer organizations as an entry point for engaging different farmer groups and ensuring they can understand the WII insurance products and can make informed choices.
The survey results show that efforts made at the outset to understand contextual issues and challenges contributed to an effective product design and rollout approach. The rollout was more effective due in part to a partnership with an established local organization while adopting an aggregator model. Covid-19 mobility restrictions prevented full implementation of the rollout.
Index insurance bundled with mobile weather and agronomic advisories increased farmer resilience and reached diverse groups. Farmers emphasized that being able to assess the costs and benefits based on understanding how key elements of the product work is key to their future engagement with such products, which highlights the importance of investing in awareness raising through a blend of print, verbal and visual tools that make complex products understandable to stakeholders with low levels of literacy.
3 Aheeyar, Mohamed; Amarasinghe, Upali A.; Amarnath, Giriraj; Alahacoon, Niranga; Prasad, S.; Dissanayake, A. 2023. Assessment of farmers’ willingness to pay for bundled climate insurance solutions in Sri Lanka. Colombo, Sri Lanka: International Water Management Institute (IWMI). 37p. (IWMI Research Report 187) [doi: https://doi.org/10.5337/2023.222]
Weather index insurance ; Farmers' attitudes ; Willingness to pay ; Assessment ; Climate resilience ; Crop insurance ; Risk transfer ; Climate services ; Seed systems ; Agricultural risks ; Disaster risk management ; Strategies ; Intervention ; Climate change impacts ; Drought ; Flooding ; Crop damage ; Smallholders ; Socioeconomic aspects ; Land ownership ; Household income ; Insurance premiums ; Gender equality ; Social inclusion ; Awareness-raising ; Institutions ; Surveys / Sri Lanka / Anuradhapura / Gampaha / Hambantota / Kurunegala / Monaragala
(Location: IWMI HQ Call no: IWMI Record No: H052415)
(1.68 MB)
With the increasing frequency and intensity of climate-related disasters, several social protection and livelihood resilience tools have been tested to reduce agricultural risks. The findings of this study are based on the initial bundled climate insurance solutions pilot conducted in five districts in Sri Lanka (Anuradhapura, Vavuniya, Monaragala, Kurunegala and Ampara) in 2021 with the support of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ). The project intervention was designed to reduce production risks and enhance agricultural resilience through the roll-out of an index insurance product bundled with hybrid seeds and mobile-based weather and agronomic advisories. The research assessed farmers' willingness to pay (WTP) for weather index insurance (WII) solutions with bundled choices as a risk transfer tool with due consideration to the diversity and heterogeneity of the farming population. The report informs the scaling opportunities of bundled climate insurance choices, including product design and implementation among smallholder farmers and reduction of production risks in designing and implementing WII products. The study findings confirm the majority of farmers' perceptions of high climate risk, but the degree of risk is variable between areas and different segments of people. Farmers’ age, gender, farming experience, levels of education, land size operated, and household income form the major factors characterizing the diversity and risk exposures. Attention to gender and social equity issues is important in the design and delivery of insurance products so that the benefits of the interventions reach most of the farming population; this can ensure achievement of the larger development objectives of equity and fairness to disadvantaged people including women. Farmers are experiencing high or very high levels of variability in crop yield, input prices and output prices. However, the differences in willingness to experiment with innovations to minimize the risks and adopt risk-taking approaches to minimize production risks and strengthen livelihood resilience indicate the requirement for carefully designed insurance products. Awareness creation is a prerequisite for this intervention to be a sustainable one. About 80% of farmers are willing to enroll in crop insurance programs, but a major inhibiting factor is the lack of trust in insurers. The amount that farmers are willing to pay as an insurance premium is in the range of 1-2% of the sum insured for the majority of farmers. Bundling insurance with farm support services could be the primary strategy for transitioning insurance programs to be a financially viable and sustainable adaptation strategy, and for upscaling these programs.
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