1. Governance and organizational partnerships
In the context of Bangladesh it is essential to have partnership between private and public sectors and NGOs to implement IBI. The public sector role would be to set a policy and regulatory framework in place to ensure reliability of insurance services and protection of those purchasing insurance products. SBC and larger private banks can serve as reinsurers as private companies will want reinsurance support before introducing crop insurance.
NGOs and MRs are best placed to implement at the grassroots level due to their existing network and reach in rural areas.
The Bangladesh Meteorological Department has collected high quality data since 1952. Rainfall is recorded every three hours from 35 weather stations throughout Bangladesh, primarily for the purposes of weather forecasting. The ADO is proposing to upgrade at least 20 weather stations and is preparing maintenance plans to improve the near- real-time weather data collection and reporting system. However, the IFC scoping report is the only study to identify the need for more granular infrastructure of weather stations to ensure that settlements are fair with low basis risk.
Over the past 30 years, the Flood Forecasting and Warning Center of the Bangladesh Water Development Board has collected daily water height data at 342 water level stations In order to assess the timing and duration of river flooding during the monsoon season. These data are used to identify the days when water levels were higher than the official danger level for each station.
The Bangladesh Bureau of Statistics has collected yield data for major crops for several decades. District level yield estimates are publicly available. The sampling is sufficient to allow yield estimates at the sub-district level or yield estimates for distinct varieties of major crops at the district level. For example, for the Boro season, separate yield estimates for focal paddy, high-yielding paddy’ and Pijam paddy are available per district.
The index model will be dependent on the type of risk, i.e., drought, excess rain etc. Constructing a model requires a multi-disciplinary approach that includes meteorologists, hydrologists, agriculture specialists and insurance experts. The model will define the level at which insurance payouts will be triggered, for example, excess rain could be defined as more than 80 mm rain within 1 to 2 days. Some models pay out zero or the full sum insured, while other models have different levels of payout correlated to the severity of the risk. IFPRI is using the zero or full sum model for drought insurance while CIMMYT is considering a triggered payout model. IBI can be designed for different levels. At micro level, farmers are targeted directly for insurance. At meso level, insurance is taken out by MFIs to cover their credit risk based on crop loss.
At macro level, government institutions or disaster relief organizations use IBI to fund extreme weather relief efforts. All current IBI projects in Bangladesh are at micro level except Oxfam’s meso level flood insurance.
Contracts for IBI should be transparent, fair and reasonably priced, and must be easy for farmers to know what is and what is not covered by the insurance. When the contract is designed, farmers, local decision makers and experts should be involved so that all perspectives are considered. All contracts have a defined start and end date to limit the period for which the underlying index is calculated. The IFPRI pilot is from July to October, the period in which farmers face the greatest risk of Incurring crop damage.
5. Capacity and community building among farmers
It is Important to make sure that farmers have ownership of the Insurance product through consultation with them throughout the design of the product. Farmers can be an integral part of validating and addressing any subsequent issues to adapt or improve the index or contract.
In some circumstances it may be possible that the weather risk is just below the trigger point for insurance payout: in these years, farmers may lose crops without compensation. In such scenarios, it is beneficial for farmers to form community groups that pool resources, such as through group savings. In addition, members of the community group can support each other when individuals are affected by household level events not covered by insurance.
6. Workshop ALMS
In preparation for the workshop, ICCCAD held preliminary meetings with selected experts and practitioners to inform the objectives and program of the workshop. Representatives from the following organizations were interviewed: CIMMYT. Comprehensive Disaster Management Program (CDMP), International Research Institute for Climate and Society, Columbia University (IRI), IFC and IFPRI.
It was mentioned by most of the experts and practitioners that although there has been much discussion in recent years about IBI in Bangladesh, there have been few instances of practical intervention. As a result, the workshop must be action oriented and seek to advance the IBI agenda. Participants should leave the workshop with an improved understanding of what actions and best practices need to be undertaken for their organizations to address the many challenges of implementing IBI in Bangladesh.
There was also a desire to learn more at the workshop about ongoing and future projects. Through the discussions of current and future IBI activities, participants can identify opportunities for collaboration. They may be able to offer needed expertise to a project or to work in different locations. Such discussions can help to reduce duplication and encourage information sharing. It was commented that to continue the monitoring of IBI projects and developments, experts and practitioners may wish to form a network. This can take the form of a simple emailing group or a more formal regular meeting.