The Potential for Scale and Sustainability in Weather Index Insurance

THE POTENTIAL FOR SCALE AND SUSTAINABILITY IN WEATHER INDEX INSURANCE
FOR AGRICULTURE AND RURAL LIVELIHOODS
Strong institutional network and delivery channels
AIC’s Sookha Suraksha Kavach product of 2005/06 failed primarily because AIC did not
have a distribution channel at the grass-roots level. Recognizing this deficiency, in 2006 AIC
began enrolling insurance intermediaries, starting with insurance brokers, followed by
corporate agents, and finally in 2008 microinsurance agents.
On the other hand, AIC saw a massive expansion of its Varsha Bima programme in its
second year, which has been largely attributed to the involvement of PACs in distributing
the product. As cooperative lending institutions, PACs have a strong network of some
100,000 distribution centres across the country. Their extensive outreach aided in
marketing and selling the product to farmers. The well-established distribution centres
also proved to be important in that farmers trust them as reliable, credible institutions.
AIC has also considered incorporating its products into NAIS.
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