Agricultural Insurance – Insurance Law and Practice Important Questions

Question 1.
Explain the crop and microinsurance in India.
Answer:
Crop Insurance and Weather Based Crop Insurance:
Crop insurance is a means of protecting the agriculturist against financial losses due to uncertainties that may arise from crop failures/losses arising from named or all unforeseen perils beyond their control.
Weather Based Crop Insurance aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from incidence of adverse conditions of weather parameters like rainfall, temperature, frost, humidity etc.

Micro Insurance:
Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved. Low-income people can use micro insurance, where it is available, as one of several tools (specifically designed for this market in terms of premiums, terms, coverage, and delivery) to manage their risks.

Live in remote rural areas, requiring a different distribution channel to urban insurance products;

Are often illiterate and unfamiliar with the concept of insurance, requiring new approaches to both marketing and contracting;

Tend to face more risks than wealthier people do because they can not afford the same defenses. So, for example, on average they are more prone to illness because they do not eat as well, work under hazardous conditions and do not have regular medical check-ups;

Have little experience of dealing with formal financial institutions, with the exception of the National Bank of Agriculture and Rural Development (NABARD) Linkage Banking programme;

Designing micro-insurance policies requires intensive work and is not simply a question of reducing the price of existing insurance policies.

CS Professional Insurance Law and Practice Notes