Crop Insurance as a Risk Management Strategy in Bangladesh

6.4 Roundtable Discussion with Policy-makers and Prospective Insurer for CI Program
Feedbacks from different stakeholders of micro insurance schemes e.g. private insurance
company managers, government policy operators, NGOs dealing with poor farmers, experts
associated with insurance related policy and management institutions, and researchers of
micro insurance policies elucidated their insights and experiences at a round table discussion.
The collective wisdom from the discussants revealed significant information and offered
important policy direction and strategies, which might be instrumental in adopting crop
insurance as an agricultural risk mitigation measure for the climate change victims. Most
noteworthy and conceptually stimulating suggestions are described as below.
Figure 6.21: Roundtable discussion on
Feasibility of Crop Insurance as a Risk
management Strategy in Bangladesh. Dr.
Mizan R. Khan (left), Managing Director,
PKSF (middle) and Dr. Mahfuzul Haque,
Chief Controller of Insurance (Right).
Bank-NGO Nexus is necessary to widen operational coverage of the traditional insurance
companies especially the micro insurers. As almost all of the insurance companies are
operating mainly in the metropolitan areas and the banks are not adequately looking after the
interest of the farmers (though many of them have operation in the peripheries), an obvious
gap exists keeping farmers literally away to have access to finance and risk coverage. The
traditional notion of the micro financer that the loan repayment ability of the farmers are low
has been proved wrong by a Bangladesh Bank pilot scheme under which agricultural loans
were disbursed to small and marginal farmers and had a cent percent recovery. PKSF
supposes NGOs can play a vital role to persuade its member to adopt insurance policy while
borrowing from them. In this regard, PKSF plans to advise its partner NGOs to start micro-
insurance as pilot schemes soon. Meanwhile, development of closer relation between bank
and NGOs over the time is offering a new scope of collaboration between them in order to
assist farmers financially and in the event of disasters. However, the mechanism as to how
such approach may work has to be worked out.
Insurance Company-NGO Nexus can be an effective approach to address the plights of the
poor farmers in the face of climatic disasters. As the NGOs who are already lending money to
them can not get involved in providing risks for life, livestock or crops unless they are
registered with the Department of Insurance as per the Insurance Act 1938 and Insurance
Rules 1958. However, as regards crop insurance, micro-finance funding agencies should
popularize the idea to its partner NGOs. PKSF can play a significant role by expanding its
services having obtained needed regulatory permission for insurance, for example- in the
recent (Nov 2007) cyclone CIDR among 23 districts 32 partner organizations of PKSF are
affected, insurance cover for the borrowers could save both the partners and PKSF from the
financial stalemate they are experiencing now.
A Nexus between Bank, Insurance Companies and NGO is thought to be a more
comprehensive approach in the sense that fund flow from Bank to NGO will enable
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