Kathmandu. Nepal is at the fourth position in the risk of global climate change. Natural disasters that are said to occur once in a century are now seen three times in a decade. In such uncertainty, while traditional insurance models are failing, parametric insurance is the last option to save agriculture.
Due to the geographical complexity of Nepal, it is not possible to reach every place to assess the damage. This insurance based on satellite and AI (Artificial Intelligence) will also bring the farmers of remote areas into the mainstream.
The government should invest in the expansion of automatic weather monitoring stations across the country to benefit farmers across the country from this insurance policy. This can be done through collaboration between donors, private sector corporate social responsibility funds, and the three tiers of government.
It is necessary to educate the farmers about the weather index-based insurance policy as it is different from the traditional insurance policy and is technically complex. For literacy, the Nepal Insurance Authority (NEA) can collaborate with non-life insurers, agricultural service centers, and local governments.
For the widespread implementation of this insurance, insurance companies will have to increase their investment in high-quality satellite data and AI models.
It would be appropriate to adopt blockchain technology to make the payment system faster and transparent. Farmers will benefit from the integrated collection of data related to seasonal index, collection of information related to claims received by the insurer in an integrated manner and the use of technology to clear insurance claims through automated technology.
Last year, Madhes Province was completely affected by drought. Some districts of Koshi Province and Lumbini Province were hit by drought. In such a situation, the farmers had to suffer huge losses due to lack of crop insurance. The federal government released a budget to install boring pumps in the name of relief package. There was talk of widespread corruption among the farmers.
Digital agriculture insurance is the way forward to mitigate the risk of climate change and ensure food security. If it is implemented effectively, more than 7 lakh farm-dependent families in Nepal will get relief.
