GDIC Deputy Senior Vice President (Underwriting Management) Ali Tareque Parvez spoke to the Dhaka Tribune’s Syed Samiul Basher Anik and Mahadi Al Hasnat about their hopes for the project
Bangladeshi farmers are vulnerable to climate change induced adverse weather events, such as unseasonal and heavy rainfall, droughts, and floods. These can all destroy crops, endangering their livelihoods.
To help farmers secure themselves financially against such risks, Green Delta Insurance Company Limited (GDIC) is piloting a new project called “Weather Index Based Agriculture Insurance”.
The project was recently awarded third prize and a grant of US$12,000 at Inclusion Plus, a global competition from Metlife Foundation that recognizes entrepreneurs who scale up innovative projects aimed at accelerating financial inclusion in the country.
Why did you create ‘Weather Index Based Agriculture Insurance’?
In Bangladesh, 45% of the population - or about 72 million people - depend on agriculture, (but) devastating weather and climate change are affecting this sector and our poor farmers are suffering.
Agricultural crises still cause complete losses of livelihoods, whereupon people migrate to urban centres in search for work. We are determined to solve the adverse weather issues and protect our farmers from losses.
Weather Index Based (WIB) Agriculture Insurance is something that might mitigate farmers’ risks (so) GDIC and International Finance Corporation (IFC) of World Bank Group joined hands to develop and deploy insurance products to address weather-related risks faced by both lenders and farmers in Bangladesh.
How does the product connect with the farmers?
The product is purely customer feedback driven. GDIC Agri Teams work across Bangladesh, regularly visiting farmers and identifying (their) risks and needs. Farmers receive a Bangla SMS every week with weather forecasts and crop advisory as a value added service. There is a call center with free calls for the farmers (and) GDIC also does yard meetings with farmers to raise their awareness.
After designing and implementing the product we do yard meetings and awareness programs to identify the best solution for farmers. Throughout the policy period we monitor weather data in that location and give updates if any trigger is locked for claims.
How do affected farmers make a claim?
Data monitoring and claim management is based on regular data from the Bangladesh Meteorological Department and will be done by an Indian company called Skymet Weather Services. With the automated claim monitoring facility, farmers do not even report for loss to GDIC to claim the insurance.
WIB Agriculture Insurance has given out claims to more than 3,000 farmers for crop damage due to weather, equipping them to bounce back and reinvest for the next season.
Which crops are covered under the pilot?
Under the WIB project, we have designed products for several crops, like cassava, industrial potato, hybrid rice seeds, cucumber, bitter gourd, tomato, peanuts, mung beans and rice.
We are capable of designing insurance for any crop in any season across Bangladesh using historical weather data from 1981, and satellite data. This is a totally new concept for Bangladeshi market.
How do you define innovation?
Innovation is the actions required to create new ideas, processes or products which when implemented lead to positive, effective change. Innovation also implies a value system which seeks to derive a positive outcome from the inventive act.
The first step of innovation is identifying the opportunity, challenge or problem. However, innovation is sometimes challenging because if you are thinking out of the box, sometimes it is not accepted or welcomed. A person has to be creative and a dreamer to be innovative. Training can help, but without creativity it will not work.
The financial industry is always looking for innovative products to change the tradition. Any innovation which can give more benefit is important for the industry.
What is the future for this product?
Bangladesh is now in the path to economic and social development. A strong economy needs to drive innovation forward or it will not reach the target. So a country like Bangladesh need lots of sustainable products for its financial strength.
GDIC is working on more digitalization and bundling this insurance with agriculture microfinance, seed bag germination, crop clinic, input, debit card for input purchase, bank loan and portfolio level products.