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Tuesday, Jul 01, 2003

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ICICI Lombard plans weather insurance

Latha Venkatraman
Rukmani Vishwanath

MUMBAI, June 30

ICICI Lombard is in the process of structuring a weather insurance product for the country's agricultural sector and is in talks with the India Meteorological Department (IMD) for a data sharing arrangement.

Weather Index Insurance, the insurance product, is likely to be structured in such a way as to cover risks arising out of vagaries of weather — mainly rainfall but may also include hailstorm and snowfall.

The insurance firm is working on defining the band of rainfall variation based on a 15-year data from IMD. "If a particular area has suffered a severe variation in rainfall as compared to the 15 year average, claims from insured farmers in that area would be taken up," the official said. This is based on the premise that a severe variation in rainfall is most likely to result in crop damage.

The insurance firm is also wont to take up claims from areas that are declared drought hit or under pest attack. However, he did not specify when the product would be launched.

ICICI Lombard is also in talks with reinsurance firms for this product so as to reduce its risk.

For ICICI Lombard the project has become a reality primarily because of the involvement of ICICI Bank in agricultural lending. The bank had disbursed Rs 2000 crore towards agriculture and food-based projects during the 2002/2003 fiscal.

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