Ways to improve the agricultural insurance system in India

Amidst the rise of unpredictable weather events, crop insurance remains a key instrument for protecting the income of over 100 million farming households in India. Despite the widespread adoption of the Pradhan Mantri Fasal Bima Yojana (PMFBY) program, the industry faces challenges with documentation processing and compensation payouts. Integrating modern technologies, policy reforms, and improving communication channels with farmers could be the solution to these problems.

To accelerate damage assessment, it is proposed to supplement traditional crop-cutting experiments with satellite imagery and remote sensing data. The use of drones will allow for the rapid recording of localized crop damage from hail or floods. Furthermore, the introduction of parametric insurance, based on metrics from automated weather stations and IoT devices, will ensure automatic payouts when critical temperature or precipitation thresholds are reached.

Digitalization is also aimed at simplifying bureaucratic procedures. Integrating land record databases with insurance platforms will reduce paperwork, while the development of mobile applications with voice control and support for local languages will facilitate damage reporting for farmers. For regions with limited internet access, services based on WhatsApp and USSD technologies can be utilized.

Technological solutions must rely on the work of local networks, such as Common Service Centers, agricultural credit cooperatives, and post office payment banks. Trusted intermediaries, including Krishi Sakhis, are capable of increasing the accessibility of services for the population.

An additional factor in the development of the system is the creation of flexible products, such as micro-insurance for specific crops or specific risks, such as extreme heat for Rabi wheat. A transparent disclosure of the premium structure, where the government's share of participation is combined with the farmer's established contribution—1.5–2% for grain crops and 5% for commercial crops—is also recognized as an important measure to increase the trust of farmers who do not have loans.