Timing is everything.
Last year, ICICI-Lombard introduced the first
weather insurance policy for the agriculture
sector in the country. It was meant to be
a shield against deficient rainfall. The weather
insurance product was launched across the
country in a big way this year. They couldn't
have picked a better year. The company has
sold its first policy to Basix Group's non-banking
finance arm Bharatiya Samraddhi Finance (BSFL).
ICICI Lombard will compensate BSFL for deviations
in rainfall below the threshold level, which
is fixed at a percentage of the average rainfall
in the area. Any claim will pay out at a per
mm rate for rainfall deviation below the threshold.
Take for example orange cultivation in Rajasthan.
Orange trees require an effective shower of
at least 60 mm of rainfall on any three consecutive
days to initiate flowering. The insurance
cover is from June 15 to July 30. A dry spell
of 10-15 days could lead to flower drop and
consequent yield loss. So any deviation in
rainfall in the 15 day period will be compensated
immediately so that farmers can take preventive
measures.
