Crop Insurance as a Risk Management Strategy in Bangladesh

Here it is to note that while applying Weather Index method, a multi-disciplinary approach
including meteorologist, hydrologist, agriculture specialist and insurance expert is it required.
Is the probability of loss from climate disasters adequately calculable?
Calculation of the probability or risk level, especially under future climate change is another
important issue. Time series analysis of past climatic record can give the existing risk level of
the region, while GCM based future climate model output can be compared to conclude
future risk level. Flood, drought and salinity intrusion or cyclonic storm surges are some
major climatic events which will be directly affected due to climate change. This study has
already reviewed the disaster scenarios for Bangladesh under climatic changes. There are a
large number of global scale studies regarding and the predictability of the models or
understandings of the phenomenon is improving day by day. So, it should not be a problem at
all to quantify future disaster risk with fair accuracy. General methodology of such risk
quantification is explained in the next chapter.
Farmers Response to CI
General impression
Farmers response to CI is quite positive. Even though they have difficulty in understanding
CI processes, however, they are familiar with life insurance. Most of the farmers in the study
area were also familiar or involved with Micro-credit and they have a good impression about
it. In fact, it is true for all over the country as because micro-credit has been spread over
entire country and most of them are doing well. Success of Micro-credit at least created a
confidence among them that Micro-insurance might bring good for them as well. The initial
stage of implementing Micro-insurance here is very important to create a positive image
there. If the farmers see that the money they are paying returned back and helping them
during crisis, surely it will become popular soon.
Organizational preference: Private or Public - Difference between Micro-credit and Microinsurance
Because of confidence in Micro-credit, most of the farmers preferred NGOs to offer CI again.
However, there are significant differences between the process of micro-credit and microinsurance.
In micro-credit system, farmers get the money first and then it is the headache of
NGOs to collect the money back, irrespective of the quality of NGO. For Micro-insurance,
the system is completely reverse, where the farmers will give the money first and insurance
organizations will pay it back after a disaster as indemnity. So, for Micro-credit they have
less scope for exploiting farmers, but in the later, i.e. in case of Micro-insurance they have
enough scope like this. Here the quality of NGO is thus important, otherwise, they might
bankrupt or leave the spot after collecting premiums or harass farmers in disbursing
indemnities. Consciously or unconsciously farmers could realize the fact, and it is reflected
in their choice.
Actually, there should be some sort of involvement of government in the process of microinsurance,
at least to monitor the process, otherwise there are always chances that the
insurance companies might try to exploit the poor farmers, and they have little means to
bargain or employ an actuarist, in case of dispute. If a few incidents like this happen,
confidence about CI among the farmers will drastically reduce. In the lalmonirhat region such
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