Helps reinsurers prepare for
uncertainty as El Nino is predicted for 2019

We have launched a new India Crop catastrophe model for the (re)insurance market. The India Crop Model is intended for use by (re)insurers to help them price and assess their exposure within the PMFBY (Pradhan Mantri Fasal Bima Yojana*) India Crop Insurance scheme.

More commonly known for market leading flood maps and models, we have collaborated with Chaucer through its office in Singapore to develop a new probabilistic crop model for the Indian agriculture insurance market. The formal launch of the model coincides with the start of the India Rabi (winter) crop growing season and amid increasing evidence that a period of El Nino weather patterns will likely prevail in the Northern Hemisphere from late 2018 into 2019.

In developing the model, JBA research highlighted the potential susceptibility of particular crop types to positive El Nino phases. The results suggest that some specific crops grown in many Indian districts during El Nino years may be subject to a 28% fall from their annual average.

Dr Iain Willis, JBA Risk Management Singapore Managing Director, explained this point further: “There’s currently a 70% chance that the global climate will experience an El Nino warming phase from October this year into early 2019. We know that El Nino can have substantial effects on the rainfall patterns of the Indian summer monsoon. Physical crop simulations that we’ve analysed using historic climate data suggest that some major Indian rainfed crops, including Soybean and Groundnut, are particularly vulnerable to these changes during El Nino years and can be adversely affected.”

The new JBA model makes use of the latest developments in agricultural technology software and utilises computer simulations to reproduce the daily growth of major insured crops throughout the Indian Kharif (summer) and Rabi (winter) growing seasons. This simulation approach seeks to avoid the uncertainties of relying on historic crop yield data, which have changed substantially over the years due to India’s green revolution – a period of time which involved the introduction of modern farming practices and high yielding variety (HYV) seeds.

JBA collaborated with Chaucer in building the India Crop Model. Tom Graham, Head of Regional Treaty Development at Chaucer in Singapore, explains: “The Indian agricultural insurance market has grown rapidly since 2015 due to the state sponsorship of a revised insurance scheme. The Indian Government has publicly stated that it is looking to ensure cover for 50% of India’s 130 million farmers by 2020 through the Pradhan Mantri Fasal Bima Yojana (PMFBY) Scheme. To facilitate and support this vital and ambitious goal, it is hugely important to have robust models in place to help assess the nature of the risk and exposure to the market. Collaborating with JBA ensured we combined Chaucer’s underwriting expertise with JBA’s leading modelling capability.”

For more information on the India Crop Model, get in touch. You can also read more about the JBA research on El Nino's effects on crops and read our India Crop Model executive briefing.

*Pradhan Mantri Fasal Bima Yojana (PMFBY) is a crop insurance scheme established by the Indian government that integrates multiple stakeholders on a single platform.

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