Index Based Insurance BASIX Experience

1. Index Based InsuranceBASIX Experience I4 workshop, Addis Ababa July 2010

2. Approach to Risk Mitigation Risk Mitigation Approach Non Financial Interventions Financial Interventions • Offer Livestock Insurance Preventive Vet Care for Livestock

3. Health Insurance PA Insurance Life Insurance Micro Enterprise Insurance Weather Based Crop Insurance Livestock Insurance Micro Pension ??? ?? ??? ??? Insurance Product Suite BASIX strives to offer complete risk management services to its customers and its journey to develop appropriate solutions still continues…….

4. Weather Based Crop Insurance Background The Current Product • Eco System • Experience so far • Challenges Ahead

5. Background • Risk management particularly for rain fed-agriculture was identified as an important credit plus service to be offered to its customers • Between 1999-2001, BASIX carried out research and pilots in testing the insurance concept for crop loss • Which culminated in the first weather insurance pilot in 2003, in collaboration with ICICI Lombard and World Bank covering 230 farmers from 7 villages

6. The Current Product Sample Product Configuration

7. The Current Product (Continued) • Weather conditions at a weather station treated as proxy to assess the expected economic loss of farmer • Sum insured unitized @ Rs. 1,000/-. • Farmer to choose appropriate cover depending on his exposure and his attitude towards risk • Policy starts on the day when cumulative rainfall reaches 50 mm- enough for sowing • Three phases: Sowing, Flowering, and Harvest • Each phase pays out or not separately

8. Eco System for Weather Insurance Insurance Co ICICI Lombard Re-Insurance Co Swiss Re BASIX Customer Facilitators *World Bank (CRMG) *Indian Met Dept *NCMSL/INGEN (Pvt met data provider) *ICRISAT (crop research inst) *ILRI (Lac research inst) *State Agri Dept

9. Experience so far

10. Experience so far (Continued)

11. Experience so far (Continued) • Implementing a contract with Development International Desjardins (DID) and FADQDI for replicating index based crop insurance in Sri Lanka. • Worked with World Bank and the Asian Development Bank in transferring a part of the knowledge and experience gained in India to other stakeholders at: • Bangkok, Thailand in May-06 for Bank for Agriculture and Agricultural Cooperatives (BAAC) • Dhaka, Bangladesh in Apr-07 for the MFIs in Bangladesh • Addis Ababa, Ethiopia in May-07 for various stakeholders in Ethiopia including Insurance companies and government ministries.

12. Challenges ahead • Need to reduce basis risk through • Deepening the network of weather stations to make the weather data more relevant to farms that are scattered over a wide geography • Improved design of the product to increase the correlation of the indices to crop requirements • yet simple enough for the easy comprehension of the majority of farmers, who are illiterate • Product pricing has to be in an affordable range to be able attract a larger number of farmers

13. Areas of our work related to IBLI • We currently offer • Livestock Insurance • Index Based Insurance • Experience from the same may be relevant to this project

14. How can we interact with current project • Setting up our operation in Ethiopia • Will act as TA providers to MFI’s • Can assist by acting as distribution partners through our partner MFI’s • Can overcome some of the limitations of the current products in India and pilot IBLI even in India • With the new technology • With the new experience

15. Challenges or issues we perceive would impact on the research or collaboration in this project • We currently have • People • Process • Experience in Index and Livestock Insurance • But we lack experience in IBLI

16. Thank Youvatsaljoshi@basixindia.com

17. Agri-Business development services LSA travel to village Credit Insurance Interacts, assesses and provides…

18. Financials