Technology can act as an enabler for faster and increased penetration of crop insurance
The Indian government has laid 1.76 lakh kms of optic fibre cables, digitally connecting over 1.18 lakh gram panchayats. The government’s target is to connect a total of 1.5 lakh gram panchayats with high-speed internet by March 2018, under its BharatNet project.
Riding on digital connectivity, the government is launching a DigiGaon (digital village) initiative to provide medical, educational, and skill development services through digital technologies. Internet connectivity in rural areas is bound to have benefits for many more purposes, particularly agriculture, which is the economic backbone of the rural economy.
Technology as an Enabler of Crop Insurance
The rapidly spreading internet connectivity could act as an enabler for faster and increased penetration of the Prime Minister’s Fasal Bima Yojana (PMFBY). The sum insured under PMFBY more than doubled to ₹141,625 crore in Kharif 2016 from ₹69,000 crore in Kharif 2015, but it is just a fraction of the potential. Agriculture contributes about 17% to India’s $2 trillion plus GDP.
Internet provides the perfect platform for use of technology in crop insurance and is a stellar example of technology in insurance industry. All the players in crop insurance – the government, the insurance companies, and the distributor banks – can have access to detailed information on risks at the farm level, minus the costs of physically collecting the data on the ground.
Technology can benefit crop insurance in several ways. These include:
- Satellite weather forecasting and satellite imagery can better equip insurers with early warnings of risks and in turn, farmers too, can be alerted and losses reduced or prevented.
- Internet of things (IoT), which is interconnection of electronic devices using the internet to send and receive data, can perform more accurately the task of collecting information on soil health, monitoring crops, and collecting crop data.
- Satellite, drones, mobile cameras can be highly cost-effective means of collecting data on area under production, yield estimation, etc.
Technology can provide the information that is critical for insurance companies at the fraction of the costs of the current manual practices. The cost efficiency thus brought in will encourage insurance companies to increase crop insurance penetration. The government’s target is to increase the coverage of PMFBY to 40% of the cropped area in 2017-18 and to 50% in 2018-19, from 30% in 2016-17.
The combined effect of increased internet connectivity, government’s push for crop insurance, and the insurance companies’ enterprise could translate into deeper use of technology in agriculture, and which in turn would hasten the reach of crop insurance.
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Rural General Insurance Sector in India