Crop Insurance as a Risk Management Strategy in Bangladesh

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the private insurers and micro-finance organizations are being consulted. The academic departments of Economics and Development Studies are also regarded as important stakeholders in articulating the issues of crop insurance. . The data and information on microinsurance is still scanty in Bangladesh. Discussions over the issue were held with some national and private sector insurance and NGO leaders including Prof. Yunus, Managing Director of the Grameen Bank. It was found that some MFI-NGOs and commercial insurers have initiated microinsurance on a limited scale. Tables 4.1 and 4.2 show the products of microinsurance undertaken by the NGOs and the private sector in Bangladesh. The tables show that both the MFI-NGOs and the commercial insurers have started microinsurance schemes mainly in the 1990s. However, the Government-owned SBC initiated non-life insurance products, such as crop, cattle and prawn culture in the early 1980s. The main findings from Bangladesh are the following: • The scale of microinsurance is extremely limited, which is focused on life and credit insurance; limited health coverage of some MFI clients has been initiated. • Microinsurance under the MFI-NGOs are kind of Self-Insurance, which defeats the principle of wider risk pooling, the foundation of insurance schemes; existing microinsurance delivery takes place under the Full-Service Model, where the insurer carries out the designing, risk assessment, marketing and distribution of their products; no system of Partner-Agent model is yet there; so there is no system of mutual insurance and reinsurance. Table 4.1 Products of Microinsurance under the MFI-NGOs Insurer Products Targets Year started BRAC Life Own members 1990 Grameen Bank Life, Loan Members Early 1990s ASA Life (Endowment) Micro-credit users 1993 Grameen Foundation Fisheries Livestock (all risks) Borrowers Late 1990s Grameen Kalyan Health Members & family Gono Sasthya Health Suburban poor Padakhep Life, Fire, Livestock (partial) Members Ghasful Life (Endowment) Urban poor 1999 Earth Foundation Crop Insurance Farmers 2007 proposed (Source: Information supplied by Padakhep, a MFI-NGO in Dhaka, May 2003) • Crop insurance initiated by the state insurer SBC in the early 1980s is already nonfunctional, because of its being an extremely losing venture (SBC incurred about 500% losses); the reasons that have been ascribed to its failure are moral hazard based on individual loss assessment, adverse selection, bad program design (like provision of multiple perils and crops, uniform level of premium across the board, high percentage of insured sum, lack of integration of the project with the mainstream agricultural development strategy), covariant risks typical of rain-fed agriculture dependent on one or two crops, advent of intermediaries and in some cases, 50
unanticipated catastrophic natural calamities. A detail evaluation of the CI programme introduced is explained in the next section. • MFI-NGO insurance funds are not sufficient to meet the large/unusual losses; therefore, sustainability of microinsurance is a big challenge. • However, from the climate disaster point of view, the major lacunae in the existing microinsurance system is the lack of cover of risks to assets and economic outputs of the poor that they build either from their own savings or from the micro-credits of MFIs. Table 4.2: Microinsurance Products under the Commercial Insurers Insurer Type Targets Products Year started Delta Life Life Low-income Grameen & 1988 (Endowment) rural poor Gono Bima National Life Life Rural/Urban Jano Bima 1994, 1996 (Endowment) poor Homeland Life Life (Endowment) Urban poor Palli Bima 1996 Sadharon Bima Non-life Rural Crop 1977 Crop (SBC) Cattle, prawn 1977, 1981, 1994, 1997 Source: Information supplied by Padakhep, a MFI-NGO in Dhaka 4.3 Crop Insurance Past Experience in Bangladesh Bangladesh introduced Crop Insurance through the state owned insurance company Sadharan Bima Corporation (SBC) in 1977 as a pilot project. The main objectives of the programme were as follows ( Rahman, 2000) ; - To indemnify farmers against crop loss, stabilize farm income and promote agricultural growth; and - To undertake research necessary for promotion and development of such crop insurance programme. A brief description of the programme with different terms and conditions are given below (SBC, 2000): Underwriting Principles Insurer : Sadharan Bima Corporation Insured : Krishak Samabaya Samity registered with BRDB and some Irrigation Projects. Later farmers availing institutional credit were also included there. Subject matter insured : Paddy ( IRRI/BORO, Aus, Aman, Jute, Wheat ) Sum insured : 80% of the last five years’ average production in the concerned field. 51
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Crop Insurance as a Risk Management
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Crop Insurance as a Risk Management
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Foreword The impacts of global warm
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ILO International Labor Organizatio
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3.6 Crop Insurance: some Terminolog
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Table 3.6 Advantages and challenges
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Figure 6.17 Organizational preferen
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Therefore, the main objective of th
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can be classified under different r
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National Reinsurance Scheme: The pu
Page 25 and 26: 1.1 Statement of the Problem Chapte
Page 27: improving day by day and many of th
Page 30 and 31: Individual or area approach: To det
Page 32 and 33: Availability of Trained Personnel:
Page 34 and 35: FGD was mainly conducted among the
Page 36 and 37: outputs were critically analyzed an
Page 38 and 39: Comments specifically related to me
Page 40 and 41: Figure 3.1: Factors causing variati
Page 42 and 43: than ten times, while the global po
Page 44 and 45: Figure 3.8: Change in Palmer Drough
Page 46 and 47: yielding but drought resistant vari
Page 48 and 49: implement from the perspective of p
Page 50 and 51: Table 3.4: Present status of disast
Page 52 and 53: 3.5 Limitation of Crop Insurance: P
Page 54 and 55: amount is measured by the extent of
Page 56 and 57: Contract (SUC). The premium rate fo
Page 58 and 59: Box 3.1: Examples of Parametric or
Page 60 and 61: Therefore, index products are a bit
Page 62 and 63: 3.10 Crop Insurance Experience at D
Page 64 and 65: 3.11.2 Canadian Experience Crop ins
Page 66 and 67: farmer was 150 percent of the crop
Page 68 and 69: segments of the population often en
Page 71 and 72: Chapter 4: Crop Insurance - Banglad
Page 73: development of insurance business i
Page 77 and 78: 1 st stage ……………………
Page 79 and 80: Taka 80,000.00 60,000.00 40,000.00
Page 81 and 82: and requirements of the insurance h
Page 83 and 84: Defining risk-reduction measures by
Page 85 and 86: Chapter 5: Climate Change and Agric
Page 87 and 88: 21 1990 CYCLONE 39 127 171099 24289
Page 89 and 90: ppmv of CO2 combined with a 4 0 C i
Page 91 and 92: Crop Damage fully ( acre) 4000000 3
Page 93 and 94: Table 5.5: Partial listing of cyclo
Page 95 and 96: Figure 5.7: Monthly mean temperatur
Page 97 and 98: magnitude or an intense or high mag
Page 99 and 100: Historical monthly values Mean Stan
Page 101 and 102: 6.1 Field Survey Chapter 6: Crop In
Page 103 and 104: Son of BoroBari now day labor (Curt
Page 105 and 106: Figure 6.4: Drought prone regions o
Page 107 and 108: Figure 6.7: Response to disaster al
Page 109 and 110: Figure 6.10: Agro-ecological sub-re
Page 111 and 112: season. Sunamgonj, as Haor region,
Page 113 and 114: % of farmer % of farmer % of farmer
Page 119 and 120: 6.3 Farmer’s Views on Climatic Ef
Page 121 and 122: disastrous affect as such mode of l
Page 123 and 124: disbursement and Insurance Company
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Chapter 7: Summary Findings & Demon
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an incident occurred and farmers we
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Moral hazards: Theoretically moral
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duration of disaster is important h
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increased to 8.51% in 2003. Such a
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- Referring to crop growth models u
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data, for example, can establish an
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particular gauge station can be com
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Figure 7.6 Defined danger level by
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Methodology to develop an index in
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Structuring the Product Once the in
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did not cross the Weather Index val
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methodology, and applicability can
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References Anderson, J. (2001). Ris
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Linnerooth-Bayer, J., Mechler, R. a
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Crop Insurance as a Risk Management Strategy in Bangladesh

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