With the appraval of the Ministry of Planning and Finance, the Myanma Agriculture Development Bank, Myanmar Insurance, and Sompo Japan Nipponkoa Insurance Inc. yesterday signed an agreement to test a weather index-based crop insurance scheme in Myanmar to protect farmers from losses due to adverse weather.
The insurance product designed by Sompo Japan was transferred to MI after Dr. SandarS Oo, the managing director of MI, U Min Thu, the managing director of MADB, and Mr. Keiji Okada, a representative from Sompo Japan, signed an agreement at the Myanma Insurance office.
“Farmers have to take loans from MADB to cultivate crops. It is hard for them to pay off their loans if their crops are damaged due to erratic weather conditions, which lands them in a debt trap. This being so, the weather index-based crop insurance scheme will be implemented to help farmers tackle such problems,” said Dr. Sandar Oo.
“The trial stage is set for one year. During the trial stage, only paddy farmers will be allowed to avail the scheme. The pilot scheme will be implemented in Shwebo Township of Sagaing Region and Pyay Township of Bago Region.
The weather index-based crop insurance will be available for purchase between February and April. Farmers will be able to buy the insurance when they get loans,” she said.
Crop insurance pays for liabilities, depending on the rate that both parties agreed to when the insurance was purchased. To set the premium, the insured amount (maximum amount payable) is calculated on the amount of rainfall, measured by the Satellite Map.
The weather index-based period is set from July to October. If the amount of rainfall does not reach the amount agreed upon in the first two months, farmers will get about 20 per cent of the premium rate.
If it fails again in the last two months, about 30 per cent of the premium will be paid.
“Although there are two types of crop insurance – yield-based crop insurance and weather index-based crop insurance, yield-based crop insurance resulted in losses in the neighbouring countries of Bangladesh and India. Therefore, we are determined not to adopt yield-based crop insurance, which burdens the government in the agricultural sector,” according to the MI.
Myanma Insurance provides 29 types of insurance. Fire insurance is the most purchased, accounting for 43.65 per cent of insurance sold. That is followed by comprehensive motor insurance (33.31 per cent) and third-party liability insurance, marine, and aviation insurance (15.02 per cent). Life insurance accounts for 6.02 per cent of insurance policies sold. Myanma Insurance earned K61 billion during the 2017-2018 fiscal year.
Dr. Sandar Oo spoke about the benefits of the weather index-based insurance model at the signing ceremony.
The event ended after a commemorative photo session.
—Myint Maung Soe/ Ko Khant
(Translated by Ei Myat Mon)