Advancing Agri-Insurance for Rural Farmers with a Technological Breakthrough

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The productivity of a climate-sensitive sector like agriculture depends entirely on the predictability of weather conditions throughout the cultivation season, which is highly unlikely due to challenges posed by climate change. In a developing country like India, where the agriculture sector is the primary livelihood for millions of smallholder farmers, their seasonal and sporadic incomes put them in a disadvantaged position when pressured to adapt to changing conditions and increasing food demands. Natural calamities such as floods, droughts, and torrential rains triggered by weather extremities are resulting in crop losses across the country, which further leads to price fluctuations in the agri-commodity market.

In such adverse situations, agriculture insurance provides timely financial support to farmers and ensures they are eligible for credit the following season. In India, various schemes and policies have been introduced over the past few decades to address the grievances of farmers, the most recent of them being the Pradhan Mantri Fasal Bima Yojana (PMFBY) or the Prime Minister’s Crop Insurance Scheme. An improvement over the schemes implemented previously, PMFBY aims to stabilize farmers’ incomes to enable them to continue farming and to ensure credit continues to flow into the agriculture sector.

The scheme also advocates for the adoption of innovative and modern agricultural practices by farmers to improve agricultural yield. In the words of a senior official who was involved in formulating PMFBY’s new rules:

We are roping in specialized agencies that can use satellites, remote-sensing data, unmanned aerial vehicles, and artificial intelligence to assess crop yield estimates at the panchayat level, reducing delays in crop insurance claim settlements.”

On one hand, the adoption of agri-tech solutions such as Cropin’s SmartRisk digitizes the numerous processes involved in insurance payouts, right from registering farmers on a centralized platform to making certain that they are the right beneficiaries receiving fair payouts.

On the other hand, advanced technological innovations such as satellite image processing coupled with artificial intelligence and deep learning enable a more accurate assessment of farmlands, cut down resources spent during the entire process, and eliminate the many shortcomings of the current manual procedures.

Farm level assessment of the yields without a technology breakthrough is a logistic nightmare and the cost of implementing a farm level insurance in the country would be more than the subsidy government is providing today.

Dr. Ashish Kumar Bhutani,
CEO of PMFBY and Joint Secretary (Credit) of the Ministry of Agriculture and Farmers’ Welfare

In a recent panel discussion at the Agri-Innovation Summit 2019 hosted jointly by Cropin Technology and The Economic Times, Dipu KV, President of Operations & Customer Service at Bajaj Allianz General Insurance, expressed that technology can be leveraged in a big way to assess damage across large tracts of land. Several companies use drones to assess small areas and get an accurate estimate, while many others use satellite imaging for extremely large areas of land. There is a science that comes with it.

It ensures that payout is made in the right manner and goes to the right person, and is the right pay for the size of the damage. Therefore, when you buy the insurance and ultimately claim a payout, if at that time insurance can come to the party leveraging technology, it can make a huge difference to small farmers,” he said.

Technology solutions also offer the advantage of scale that makes the per-unit cost far more economical for banks and crop insurance providers.

Jitesh Shah, Chief Revenue Officer at Cropin, asserts that the digitization of smallholder farmers across the country grants financial institutions better access to the market at large. “At this point, insurance providers are not just speaking of cost optimization but are also looking at how they can increase their customer base to add value to the top line,” he added.

The Agri-Innovation Summit 2019 invited distinguished industry leaders to share their opinions on how the next generation AgriTech is enabling financial institutions to advance their business and cater efficiently to more and more smallholder farmers in rural geographies. Watch the expert panel to learn more.


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