AIR unveils model to simulate weather risk for Indian farmers
AIR Worldwide has released a multiple peril crop insurance (MPCI) model for India.
The model has been designed to provide probabilistic assessments of potential losses caused by yield shortfalls for 11 major crops across the two main India crop-growing seasons. It is an event-based model, with an event defined as an individual crop year made up of a kharif season (from late spring to autumn) and a rabi season (from autumn to spring).
Jeff Amthor, assistant vice president of AIR Worldwide, said developing the model had been a challenge because of the lack of high quality historical data on planted areas and yields of insured crops.
“Our team at AIR invested significant effort in gathering data and, just as important, in screening it for quality and consistency,” he said. “As a result, we produced what may be the highest-quality single data set of India’s state and district crop production statistics currently available.” The model features a historical catalog of losses based on a recast of the years 1979 through 2017.
The model features a stochastic catalog of 10,000 simulated crop years, describing a wide range of possible crop loss scenarios, both common and rare, for both seasons.
The model uses a combination of quality-assured historical yield events and both historic and stochastic all-India gridded weather data sets composed of daily values of minimum air temperature, maximum air temperature, rainfall amount, and maximum wind speed. These factors allow it to simulate a full range of crop insurance loss outcomes under the current terms of the Pradhan Mantri Fasal Bima Yojana (PMFBY), the Indian government sponsored crop insurance scheme.
“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 Praveen Sandri, executive vice president and managing director of AIR Worldwide India. “One of the most valuable components of this model is that reinsurers in the India crop market can 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.”
The AIR MPCI model for India is available in the Touchstone Re catastrophe risk management system.