The Hindu Business Line : ICICI Lombard offers cover for wind farms

Wind farms in Tamil Nadu, Gujarat, Rajasthan and Karnataka can now be insured against possible losses of power production due to fall in daily average wind speed. Considered to be the first such initiative in the country, ICICI Lombard General Insurance has designed weather insurance products for wind farms and other commercial ventures including brick kilns.

Mr Pranav Prashad, Head, Rural and Agriculture Business Group, ICICI Lombard, said the insurance covers have been designed using weather as a parameter rather than the traditional method of insuring production losses.

"If the speed of the wind falls below the benchmarked index and causes a fall in the generation of power, the insured becomes eligible for compensation," he said

The claim payouts are made on the basis of a wind power production index during the cover period. The index is based on a wind power curve at the reference weather station.

For instance, if the wind speed is 6 meters per second then the power production could be 100 KW while if the wind speed is 25 meters per second then the generated power could be 700 KW. The duration of the policy is one year and the sum assured ranges from Rs 1 crore to Rs 5 crore.

India is the fifth largest wind producer in the world with a power generation capacity of 1870 MW.

Mr Prashad said the historical data for creating the index had been sourced from the Ministry of Non-Conventional Energy.

In the case of brick kilns, the insurance is against unseasonal rainfall. The brick making process is divided into moulding, drying and the firing of the bricks and the maximum damage occurs in the second stage.

The claim payouts in this case are also based on indices (evolved from weather data from the IMD) regarding the number of days and the amount of unseasonal rainfall received. The duration of the policy is for six months and in the non-monsoon period between November and April. The sum assured for such a policy would range between Rs 75,000 and Rs 10 lakh while the premium ranges from 7 to 12 per cent.

"The losses faced by brick kiln owners may run into lakhs of rupees based on the severity of the rainfall as the rain damages the raw bricks and they cannot be used subsequently in the manufacturing process," said Mr Prashad.

ICICI Lombard is currently in talks with brick kiln manufacturers mainly in Punjab, Himachal Pradesh, Haryana Uttar Pradesh, West Bengal, Maharashtra, Orissa and Tamil Nadu.

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