Farm Security Technology News

AgTech: Weather Based Crop Insurance Scheme

Objective of the Scheme

Weather Based Crop Insurance aims to mitigate the hardship of the insured farmers against the likelihood of financial loss on account of anticipated crop loss resulting from incidence of adverse conditions of weather parameters like rainfall, temperature, frost, humidity etc. Weather Insurance has been piloted in the country since Kharif 2003 season. Some of the States where it's piloted are Andhra Pradesh, Chhattisgarh, Gujarat, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Rajasthan etc. The objectives of the scheme are:

- To offer insurance security to the farmers against untoward weather incidence, such as shortage and surplus rainfall, high or low temperature, humidity etc. which are held to affect adversely the crop production.

- It has the vantage of settling the claims within minimum possible time.

It is based on actuarial rates of premium but to make the scheme appealing, the premiums actually charged from farmers have been restricted to and made at par with NAIS. The difference between actuarial rates and premium actually paid by farmers are borne by the Government (both Centre and State concerned on 50:50. Besides this a cap on premium payable by farmers for annual commercial crops has been provided.

Scheme Plan

The state and central governments will subsidise the premium 50:50 for WBCIS. Farmers will have to pay 2.5-3 per cent of the premium for Kharif (food and oilseed crops) and 1.5-2 per cent for crops in rabi season. The claims will be fully paid by AIC.

Difference Between Crop Insurance & Weather Based Crop Insurance

- While Crop Insurance specifically indemnifies the cultivator against shortfall in crop yield, Weather based Crop Insurance is based on the fact that weather conditions affect crop production even when a cultivator has taken all the care to ensure good harvest.

- Historical correlation studies of crop yield with weather parameters help us in developing weather thresholds (triggers) beyond which crop starts getting affected adversely.

- Payout structures are developed to compensate cultivators to the extent of losses deemed to have been suffered by them using the weather triggers. In other words, "Weather based Crop Insurance uses weather parameters as proxy for crop yields in compensating the cultivators for deemed crop losses"


Weather based Crop Insurance Scheme (WBCIS) is a unique Weather based Insurance Product designed to provide insurance protection against losses in crop yield resulting from adverse weather incidences. It provides payout against adverse rainfall incidence (both deficit & excess) during Kharif and adverse incidence in weather parameters like frost, heat, relative humidity, un-seasonal rainfall etc. during Rabi. It is not Yield guarantee insurance.


Weather based Crop Insurance Scheme (WBCIS) operates on the concept of "Area Approach" i.e., for the purposes of compensation, a 'Reference Unit Area (RUA)' shall be deemed to be a homogeneous unit of Insurance. This RUA shall be notified before the commencement of the season by the State Government and all the insured cultivators of a particular insured crop in that Area will be deemed to be on par in the assessment of claims. Each RUA is linked to a Reference Weather Station (RWS), on the basis of which current weather data and the claims would be processed. Adverse Weather Incidences, if any during the current season would entitle the insured a payout, subject to the weather triggers defined in the 'Payout Structure' and the terms & conditions of the Scheme. The "Area Approach" is as opposed to "Individual Approach", where claim assessment is made for every individual insured farmer who has suffered a loss.

Source : Ministry of Agriculture

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