AIC plans expanding parametric insurance products to livestock, people

Country's largest farm insurer plans to scale up weather-linked cover to livestock and income protection for agricultural workers

Agriculture Insurance Company of India (AIC), the country’s largest farm insurer, plans to expand its range of parametric products beyond crops to cover livestock and even people, according to its chairman and managing director, Lavanya R Mundayur.

 

Parametric insurance works by defining a measurable trigger, such as rainfall or temperature, that automatically activates claim payouts when pre-agreed thresholds are breached.

 

“For instance, we had once designed a very interesting cover — though it hasn’t yet been marketed widely — for women agricultural workers. It was an income-loss protection on a parametric basis, triggered by extreme weather conditions like cyclones or heat waves. For example, if the temperature crosses a certain threshold or if wind speed crosses a certain level leading to cyclone, which in turn leads to loss of workdays, the cover would automatically trigger a pre-agreed payout,” said Mundayur in an interview with Business Standard in New Delhi.

 

“The concept was designed on a pilot basis for fisherwomen. The idea is not to cover routine occurrences but to protect against severe, unexpected events — such as extreme drought or cyclone — that cause significant income disruption.”

 

AIC, for the past three years, has had an arrangement with Kerala Co-operative Milk Marketing Federation, known by its trade name Milma, to provide insurance for cattle under a heat-index metric in various districts of the state. Such products are running as small pilots and the plan is to extend them to larger population segments.

 

“What we’ve realised is that we already possess the expertise to design these term sheets according to the specific needs of each client. We also have strong pricing capabilities supported by our in-house models. Our team of pricing experts and actuaries has been developing these competencies over the years, though we haven’t publicised them much. We’ve implemented them in select pockets, and now we’re focusing on scaling them up,” Mundayur said.

 

That would be possible if the government gives subsidy support. “Fewer than one per cent of the country’s cattle are currently insured. There have been discussions about leveraging the existing NCIP (National Crop Insurance Portal) platform to bring livestock insurance under the same umbrella. That could be a real game-changer, but these plans are still evolving,” she said.