Insurance market development – India

The Indian market has a long-lasting experience with insurance schemes. The first public „Comprehensive Crop Insurance Scheme (CCIS)“ was introduced in 1985 and in subsequent years large area-yield based crop insurance schemes for smallholders followed. In 2003, a private insurer piloted a weather index-based crop insurance with international technical assistance and in 2007, the Government of India integrated it into the public subsidized agricultural insurance scheme. Today, the Government of India supported crop insurance schemes cover more than 40 million farmers.

The German technical contribution to the InsuResilience Global Partnership seeks to advance the Indian market by introducing innovative climate risk insurance solutions to make them more accessible and affordable for poor and vulnerable people, who are often engaged in informal sector activities. Thereby, innovation can have different manifestations, e.g. extending the class of beneficiaries beyond farmers, introducing new insurance coverages or technologies.

The work of the GIZ global project InsuResilience in India has currently three work streams. The first one focuses on rolling-out a product bundle innovation in cooperation with an Indian association and Self-Regulatory Organisation (SRO) of Non-Bank Finance Company-Micro Finance Institutions (NBFC-MFIs), who regulates the operational and financial practices of its members. In India, MFIs significantly contribute to financial inclusion of unbanked customers, providing micro credit to a low-income customer segment in both urban and rural areas. More frequent and more intense extreme weather events endanger significantly MFI customers’ ability to repay their monthly credit instalments, which could lead to a rising number of non-performing loans. With the intention to protect the MFI’s customers against losses due to flood, drought, earthquake and cyclone risks, the SRO aims at linking a multi-peril natural catastrophe (NatCat) index-insurance to group loans handed-out by its member MFIs. At a customer level, the NatCat insurance coverage is intended to prevent or at least to mitigate negative coping strategies, supporting MFI customers to pay off credits in the aftermath of natural catastrophes. MFI customers include farmers, laborers, and micro-entrepreneurs. This approach represents a novelty. The pilot is planned to be rolled-out prior to monsoon season 2019.

The second work stream has the objective to develop a concept for a satellite-based flood index insurance. Current activities have a distinct research and development character, i.e. GIZ is evaluating the technical opportunities and limitations of the use of Sentinel-1 and Sentinel-2 satellites, which provide data free of charge. Initial work on mapping floods based on satellite data was conducted by the German Aerospace Center (DLR) and US start-up Cloud to Street. The collaboration with DLR will last until September 2019 and has the objective to build automated flood detection processors based on Sentinel-1 and Sentinel-2 satellites. Such flood-monitoring methods shall deliver the parameters needed for a flood index insurance solution. However, it will most likely be necessary to also exploit additional satellite sources and apply numerical flood modelling approaches as well as digital elevation models in order to deliver robust parameters. The current working hypothesis foresees an insurance coverage for a loss of income. A satellite-based flood index insurance is a promising approach to protect low-income households in developing and emerging countries from flood hazards.

The third work stream of the GIZ global project InsuResilience in India focuses on piloting a Blockchain technology based Farm Income Protection Plan. Contracted farmers are obligated to fulfil certain pre-conditions (i.e. use of preventive spray, high-quality seeds or other farming best practices) in order to receive compensation when experiencing income losses due to weather- or production related risks. The use of Blockchain technology increases transparency, traceability and trust within the value chain and helps to create a scalable and robust information system for contracting purposes.

For more information, please contact Oliver Milosch (, Dr. Nihar Jangle (, and Dr. Vaibhav Sharma (

Risk Continuum