AIR Worldwide releases multi-peril crop insurance model for India

In view of supporting probabilistic assessments of potential losses caused by yield shortfalls for 11 major crops across the two main India crop-growing seasons, catastrophe risk modelling firm AIR Worldwide has released a multiple peril crop insurance (MPCI) model for India. It is said to provide a high-quality single data set of the country's state and district crop production statistics currently available.

“Despite the long and extensive history of agriculture in India, it is only recently that multiple-peril crop insurance has been widely available to farmers,” said AIR Worldwide India executive vice president and managing director Dr Praveen Sandri.

The MPCI Model for India is an event-based model, with an event defined as an individual crop year made up of a ‘kharif’ season (the summer period from late spring into autumn) and the following ‘rabi’ season (the “winter” period from autumn into the following spring). According to Dr Sandri, the model enables reinsurers in the India crop market to have their exposure data analysed at the district level or aggregated to the cluster and/or state level for individual crops or all crops combined. He considers this as one of the most valuable components of the model.

Commenting on the release of the MPCI model, AIR Worldwide assistant vice president Dr Jeff Amthor said, “One of the many challenges in developing and testing an MPCI model for India crops is the collation and evaluation - quality assuring- of the available historical data on planted areas and yields of insured crops, which comes from various, sometimes contradictory sources. Our team at AIR invested significant effort in gathering data and screening it for quality and consistency”        The model also features a historical catalogue of losses based on a recast of the years 1979 through 2017. Both the stochastic and historic recast yield and loss catalogues reflect current crop ‘technology’ levels such as current crop genetics, farmer skills, availability of chemical inputs.

It also shows insurable exposure by district and the state-sponsored crop scheme ‘Pradhan Mantri Fasal Bima Yojana’ policy conditions as revised in late 2018. The AIR MPCI Model for India is currently available in the Touchstone Re™ catastrophe risk management system.

Source: Asia Insurance Review