From Fields to Coverage: Rural Insurance

More than 70% of the citizens live in rural areas in our country. India with a population over 140 crore is in its growing stage when it comes to the insurance sector. Its market accounts for 1.5% of the? world’s total insurance premiums despite its population.?

At present, life insurance coverage in rural India is set at a mere 8-10% while less than 20% of the rural population has any form of health insurance. Also, 95% of Indian housing lacks any form of property coverage. But agriculture and rural economies have evolved over the years, and the government is also helping speed up the process of providing insurance coverage to rural india.?

Historical Roots:

Rural insurance traces its roots back to ancient agricultural societies, where communities would pool resources to support fellow farmers in times of crop failure or natural disasters. In the modern era, the concept of rural insurance began to take shape during the 19th century.?

Crop Insurance Advancements:

As agriculture became more mechanised and scientific, crop insurance evolved to protect farmers from unpredictable weather events and crop failures. In the 1930s, the United States implemented the Federal Crop Insurance Corporation (FCIC) to offer subsidised crop insurance, which significantly expanded the reach of coverage to farmers across the country. Today, governments in various countries continue to provide crop insurance programs, ensuring the stability of rural economies.

Livestock and Property Insurance:

Apart from crop insurance, rural insurance also encompasses coverage for livestock and rural property. Livestock insurance has seen substantial growth, protecting farmers from financial losses due to livestock illnesses, accidents, or theft. Moreover, rural property insurance has become more tailored to the specific needs of rural dwellers, providing comprehensive coverage for farmhouses, barns, and other rural structures.

Advance Technology ?:

The digital revolution has significantly impacted the rural insurance industry. With the rise of IoT (Internet of Things) devices and remote sensing technologies, insurers can now better assess risks in rural areas and offer more accurate and personalised insurance packages.?

For instance, crop insurance providers can use satellite imagery to monitor crop health and offer timely support to farmers in times of distress.

Climate Change Challenges:

There is a 66% likelihood that the annual average near-surface global temperature between 2023 and 2027 will be more than 1.5°C above pre-industrial levels for at least one year.?

As of May 2023, CO2 PPM (parts per million) is at 420.00 and the global temperature rise is 1.15C compared to pre-industrial levels. The last time carbon dioxide levels on our planet were as high as today was more than 4 million years ago.

Climate change continues to affect weather patterns worldwide, rural insurance faces new challenges. The increasing frequency of extreme weather events poses higher risks to agricultural production and rural livelihoods. To adapt, insurance companies are reevaluating their risk models and collaborating with experts to develop innovative climate risk management strategies.

The evolution of rural insurance has been a story of resilience. From its humble beginnings in mutual support systems to today's sophisticated coverage offerings, rural insurance has played a critical role in supporting rural economies. As technology and environmental factors continue to shape the industry's future, it is essential for insurers to remain proactive in addressing emerging challenges and providing comprehensive solutions. We can better appreciate the significance of rural insurance in protecting the backbone of our communities - the farmers.