TY  - BOOK
AU  - Clarke,Daniel J.
AU  - Clarke,Daniel J.
AU  - Mahul,Olivier
AU  - Rao,Kolli N.
AU  - Verma,Niraj
TI  - Weather Based Crop Insurance in India
PY  - 2012///
CY  - Washington, D.C.
PB  - The World Bank
KW  - Agriculture
KW  - Bankruptcy and Resolution of Financial Distress
KW  - Climate Change Economics
KW  - Crop insurance
KW  - Debt Markets
KW  - Developing countries
KW  - Finance and Financial Sector Development
KW  - Hazard Risk Management
KW  - Insurance & Risk Mitigation
KW  - Pricing
KW  - Product design
KW  - Weather index insurance
KW  - India
N2  - The weather index insurance market in India is the world's largest, having transitioned from small-scale and scattered pilots to a large-scale weather based crop insurance program covering more than 9 million farmers. This paper provides a critical overview of this market, including a review of indices used for insurance purposes and a description and analysis of common approaches to design and ratemaking. Products should be designed based on sound agronomic principles and further investments are needed both in quantifying the level of basis risk in existing products, and developing enhanced products with lower basis risk. In addition to pure weather indexed products, hybrid products that combine both area yield and weather indices seem promising, with the potential to combine the strengths of the individual indices. A portfolio approach to pricing products, such as that offered by Empirical Bayes Credibility Theory, can be significantly more efficient than the standalone pricing approaches typically employed in the Indian market. Legislation for index insurance products, including consumer protection legislation, should be further enhanced, for example by requiring disclosure of claim payments that each product would have made in the last ten years. The market structure for weather based crop insurance products could better reward long-term development of improved product designs through product standardization, longer term contracts, or separating the roles of product design and delivery
UR  - http://elibrary.worldbank.org/doi/book/10.1596/1813-9450-5985
ER  -