Kathmandu. For a country like Nepal, which is at high risk of climate change, agricultural insurance is not just a paper process but has become the basis to save the existence of farmers. The insurance policy recently released by the Nepal Insurance Authority (NIA) aims to usher in a new era in the agriculture sector of Nepal through the use of technology.
Parametric insurance is not new in Nepal. The plan was in operation as a master plan for some years especially for apple farmers of Jumla, Kalikot and Mugu of Karnali State.
A few years ago, there was a big problem with this. While insuring more than 7,500 farmers, it was revealed that the government subsidy was claimed in insurance premium by showing about 25 percent more saplings than the actual number of plants. After the Commission for the Investigation of Abuse of Authority (CIAA) launched a corruption probe into the number of saplings, the issuance of insurance policies and claim payments came to a complete halt for a few months. This affected the real farmers.
The current directive issued by the authority has made it mandatory to install satellite data and automated systems to prevent human error and corruption. Now, instead of the hassle and controversy of people counting trees, technology will measure rainfall or drought and determine the compensation directly.
According to the latest data, more than 15,000 farmers in Nepal have been directly covered under the Seasonal Index Insurance. Apple farmers in Jumla and Kalikot have received compensation of Rs 310 million in the last eight years. As many as 1,700 paddy farmers of Bardiya and Kailali have received the compensation of around Rs 3.5 million from the parametric insurance of unseasonal rains and floods.
The biggest advantage of this insurance is the ease of claim payment. The compensation amount is paid to the farmers within 72 hours of a flood or drought. In this way, if they get the money immediately, they can prepare for the next crop.
Many farmers may have the misconception that modern insurance is expensive. However, according to the NEA, the government of Nepal has provided 80 percent premium subsidy on seasonal index insurance like other traditional agricultural insurance. Farmers have to pay only 20 percent of the total insurance premium. This grant has been very effective in encouraging small farmers.
Due to the geographical situation of Nepal and the risk of climate change, it is not possible for the employees of the insurance company to reach everywhere to collect the compensation for the loss.
The new directive is expected to protect farmers across the country from climate risk and prevent a recurrence of insurance issues in Karnali.
