Closing the agri-insurance gap among India’s smallholder farmers

How can easier access to financial services like insurance increase low-income people’s resilience to climate change?

What can a social enterprise that helps India’s smallholder dairy farmers earn more and lower their carbon emissions learn from a team of Swiss Re volunteers?

For the roughly 80% of farmers in India who are smallholders, extreme weather events increasingly occurring due to climate change – such as excessive rainfall or drought – threaten the ability to earn and even to survive.

Although insurance is well suited to managing these risks, the insurance gap among smallholder farmers in emerging contexts is huge. Barriers to uptake include lack of awareness and understanding of how insurance works, low banking access, poor internet connectivity in rural areas and unaffordable premiums.

Since 2021, the Swiss Re Foundation has co-funded ten projects in SCBF’s portfolio in which low-income people are offered insurance against agricultural, property or health risks. Supported by its partners in the public and private sectors, SCBF enables financial service providers, including early- to mid-stage social enterprises and micro-finance institutions, to rapidly scale these inclusive solutions and thus to improve more lives and achieve financial sustainability sooner.

This story about a partnership in India between agricultural micro-insurer IBISA and Collectives for Integrated Livelihoods (CInI), a nodal agency of the Tata Trusts, showcases the power of SCBF’s approach. From September 2022 to December 2023, IBISA leveraged funding and technical assistance from SCBF as well as CInI’s network to reach thousands more smallholder farmers with its digital weather index-based insurance – a simple, affordable form of financial protection from crop and asset loss.

Getting insurance to those who need it most

In the video below, SCBF CEO Sitara Merchant explains how SCBF empowers the social enterprises in its portfolio to amplify impact, while IBISA project manager Dipankar Munshi describes his company’s index-based crop insurance product and how teaming up with CInI boosted its distribution.

Also featured: CInI Team Lead Santanu Dutta on the project setting and the role of local farmer-producer organisations (FPOs) in making the case for insurance, and Saraswati Behera – chairperson of a participating FPO – and farmer Sasirakha Naik on how the insurance cover helped offset crop losses in 2023 and why they’re willing to continue the coverage.

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SCBF infograph Jan 24 impact story
Open SCBF infograph Jan 24 impact story in overlay

The single biggest learning from this project is that existing community-based groups like those in CInI’s network are a powerful conduit for communicating about and delivering inclusive insurance solutions to low-income people in emerging contexts.

Also, offering group-level coverage to FPOs rather than to individual smallholders – who are often unbanked and sceptical of financial institutions – eased implementation and helped IBISA reach thousands more prospective customers than it could have otherwise.

The project illustrates SCBF’s ability to engage broad-based partnerships to develop more inclusive financial products, distribution channels and technology platforms and to facilitate those products’ uptake in emerging contexts.

This approach enables private sector partners to innovate and test new solutions before bringing them to scale. SCBF members reach out to early- and mid-stage ventures, shape their funding applications and guide them in how to refine and strengthen their business models for rapid growth.

Insurance has an important role to play in increasing the resilience of low-income people, especially in developing countries. Private sector participation is needed to complement government efforts as the public sector is unlikely to achieve the required scale alone.

We see tremendous value in collaborative organisations that, like SCBF, can efficiently pool and allocate funding and expertise from diverse actors to accelerate the development and scale-up of inclusive finance.

 

 

  • 29 000

    smallholder farmers in Gujarat and Odisha protected by IBISA’s insurance from financial losses due to extreme weather, more than half of them women

  • 1.5 million

    low-income people will be protected by affordable health or climate risk insurance through our ten projects with SCBF

  • 690 000

    of those 1.5 million low-income people protected are women

  • 50%

    of SCBF projects supported by the Foundation use digital technology to make insurance more accessible to low-income populations, while the others plan to use it to operate more efficiently

Further Information

The copyright for all images and video displayed lies with Selvaprakash Lakshmanan/Fairpicture and SCBF

​Portfolio of projects with SCBF

Learn more about our ten projects with SCBF in the last three years, across six countries in Africa and Asia. These projects span across diverse thematic areas, ranging from health insurance to parametric insurance.

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