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The insurance premium would be decided on a case-to-case basis depending upon the geography and the risk associated.

Mumbai , Sept. 8

ICICI Lombard General Insurance has launched a comprehensive `weather insurance' product to protect the farmers from the problems arising due to the vagaries of weather.

The company has conceptualised and modelled `rainfall insurance' policies in association with the World Bank, ICICI Bank and BASIX — a micro-finance institution, said a press release.

The insurance premium would be decided on a case-to-case basis depending upon the geography and the risk associated. "Weather insurance does not suffer from the issues of moral hazard, adverse selection and high administrative costs of traditional crop insurance, and it is therefore better suited to small farmers in rainfall-dependent countries such as India," said the release quoting Mr Ritesh Kumar, Head-Risk, ICICI Lombard General Insurance.

"Our experience in the implementation of the pilot project has been very encouraging and the company is geared to scale up the operations and ensure fast claims settlement," added Mr Kumar.

To get reliable data, ICICI Lombard has tied up with the Indian Metrological Department to obtain the latest weather reports and historical charts.

To begin with, the company has successfully implemented a pilot project in Andhra Pradesh. The pilot programme, the country's first rainfall insurance program was conducted in July 2003 through KBS Bank (Krishna Bhima Samruddi Local Area Bank), a subsidiary of BASIX in Mahabubnagar at the eastern end of Andhra Pradesh, bordering Karnataka. KBS Bank bought a bulk insurance policy from ICICI Lombard and sold around 200 individual farmer policies for small, medium and large groundnut and castor farmers. "The pilot program demonstrated how non-irrigated farmers in developing countries can protect their livelihoods," said Mr Kumar.

KBS Bank and ICICI Lombard opted for a weighted and capped rainfall index, which means that the maximum rainfall counted per sub-period is limited to 200 mm and that more critical periods for plant growth are weighted more heavily than others. ICICI Lombard General Insurance is the first to get the approval from IRDA to launch weather-linked insurance products in the country.

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