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ICICI Lombard Rural Insurance |
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Policy Exclusions
• Any accidental loss or damage and/or liability caused sustained or incurred outside the geographical area.
• Any claim arising out of any contractual liability.
• Any accidental loss or damage and/or liability caused sustained or incurred whilst the vehicle insured herein is
• Being used otherwise than in accordance with the ‘Limitations as to Use’ or
• Being driven by or is for the purpose of being driven by him/her in the charge of any person other than a Driver as stated in the Driver´s Clause.
Losses such as:
• Any accidental loss or damage to any property whatsoever or any loss or expense whatsoever resulting or arising there from or any consequential loss.
• Any liability of whatsoever nature directly or indirectly caused by or contributed to by or arising from ionizing radiations or contamination by radioactivity from any nuclear fuel or from any nuclear waste from the combustion of nuclear fuel. For the purposes of this exception combustion shall include any self-sustaining process of nuclear fission.
• Any accidental loss damage or liability directly or indirectly caused by or contributed to by or arising from nuclear weapons material.
• Any accidental loss or damage/liability directly or indirectly or proximately or remotely occasioned by, contributed to by or traceable to or arising out of or in connection with war, invasion, the act of foreign enemies, hostilities or war like operations (whether before or after declaration of war), civil war, mutiny, rebellion, military or usurped power or by any direct or indirect consequences of any of the said occurrences and in the event of any claim here under the insured shall prove that the accidental loss damage and/or liability arose independently of and was in no way connected with or occasioned by or contributed to by or traceable to any of the said occurrences or any consequences thereof and in default of such proof, the Company shall not be liable to make any payment in respect of such a claim.
Weather Insurance
The need for risk mitigation in agriculture has been long felt. Agriculture contributes 24% of the GDP and any change has a multiplier effect on the economy as a whole. The target of 7-8% economic growth depends significantly on agricultural growth. Weather insurance is an indemnity for losses that may arise due to abnormal weather conditions. These abnormal weather conditions can be events such as excess of rainfall, shortfall in rainfall or variations in temperature, wind speeds and humidity.
Key Benefits
The benefits that weather insurance offers are:
• It is transparent and thus leads to high level of client comfort.
• It is easy to administer and thus leads to low management expenses.
• It is scientifically developed and objective.
Weather insurance has multiplier effect on the economy as it enables access to factors of production. Adequate protection offered through the weather insurance product enhances the risk taking capacity of the farmers, banks, micro-finance lenders and agro-based industries. This in turn would result in boosting the entire rural economy.
Further, as the product is developed on the foundation of universally acceptable parameters, it is easier to transfer the risk to international financial markets through reinsurance. This allows for global pooling of risk and thereby more competitive "portfolio adjusted" pricing for the insurer and ultimately for the farmers.
Product Structure
Peril Identification:
Peril identification involves appreciation of agronomic properties of the crops or nature of the economic activity. Detailed correlation analysis is carried out to ascertain the way weather impacts yields of the crops/ output of other economic activities.
Index Setting:
In weather insurance, the claim is settled on the basis of a transparent index. The index is created by assigning weights to critical time periods of crop growth. The past weather data is mapped on to this index to arrive at a normal threshold index. The actual weather data is then mapped to the index to arrive at the actual index level. In case there is a material deviation between the normal index and the actual index, compensation is paid out to the insured on the basis of a pre-agreed formula.
Back testing for payouts:
In order to ensure the robustness of the structure, the normal index is extensively tested based on historical data to ascertain if the payouts made on the basis of the chosen indices would have adequately indemnified the loss in the past or not.
Pricing:
Pricing is determined based on components of expected loss, volatility of historical losses and management expenses.
Monitoring:
This entails collection of weather data during the policy period and concurrent assessment of the ground conditions.
Claims Settlement:
The claim settlement is a hassle-free process, as the beneficiary is not required to file a claim for loss to receive a payout. Instead ICICI Lombard will compensate the beneficiary at the end of the crop season for any deviations from the normal conditions on the basis of the data collected from an independent source accessible to all, like a local weather station, thus removing the need for carrying out field surveys.
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