Agriculture Reference
In-Depth Information
PROCESS
DETAILS
• Need for product is identified (normally by local organization)
• Consortium is formed of interested parties, normally including
- Data providers (e.g., national meteorological services)
- Local organizations, farmer groups and NGOs
- Re-insurers and intermediary companies
- Research organizations (esp. in pilot schemes)
• Initial locations selected
ESTABLISH A
CONNECTION
Start
of the
project
• Capacity building and training of local partners and farmers
• Explore potential for index insurance and connection with
customer relationship management strategies
(discussions with local partners and farmers)
• Visit with potential end users of product (e.g., farmers) to:
- Introduce index insurance
- Collect information for index design
• Work with data providers to gather relevant agro-meteorological
information for the sites
PROJECT
SCOPING
• Compare elicited information with agro-meteorological data
(e.g., use data library)
• Decide on a variable that best captures the “bad years”
• Use this to design a draft index
(e.g., set index parameters,define critical windows)
PRODUCT
DESIGN
• Capacity building and training of local partners and farmers
• Return to local partners, experts and end users with the draft
index, plus historical data to discuss which years in the past
would have triggered pay-outs
• Refine the index with feedback from stakeholders
• Use statistical analysis methods to test robustness of draft
indexes and refine as necessary
PRODUCT
REFINEMENT
Pre-
season
• Work with all stakeholders (e.g., farmers, local partners) to
finalize index package (e.g., frequency of pay-outs offered,
critical windows)
• Connect with insurance/reinsurance companies to price the
product
• Farmers decide if they wish to purchase for the upcoming
season
PRODUCT PRICING
AND FINALIZATION
During
the
season
• Appropriate data provider collects the data for the index
• General monitoring of the season
DATA COLLECTION
• Technical advising provided for:
- Analysis of the index to see whether pay-out should occur
- Pay-out recommendations
• Local institutions implement pay-outs
• Feedback from the end users via local institutions and field visits
• Further validation through analysis of other sources of
agro-meteorological data
END OF SEASON
ASSESSMENT
Is the customer
satisfied with the
outcome?
Post-
season
• In some cases, the end users may feel that their season
warranted a pay-out or that a larger payment should have
occurred. This may result in the refinement of the product or
further capacity building, or is a signal that other safety nets
need to be put in place
Yes
No
PREPARE FOR
THE NEXT
SEASON
ADDITIONAL
FIELD VISITS AND
CONSULTATION
FIGURE 9.1
Flow of information in an index insurance product design
(Source: Dan Osgood and
Helen Greatrex, Columbia University).
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