India’s leading post-harvest services company Arya Collateral and Agriculture Insurance Company of India Limited (AICIL) announced to execute a first of its kind parametric insurance cover to mitigate utilization risk for agricultural warehouses. Arya in partnership with AICIL has developed a weather-based parametric insurance product that will protect professional warehouse operators against utilization risk arising due to extreme weather conditions during the growth and harvest stages of the crop.
Utilization risk deters professional warehousing operators from creating storage capacity for farmers at the farm gate. This invariably increases the cost of storage for farmers and other stakeholders. The arrangement will also help in mitigating the utilization risk of warehouses aggregated through Arya’s a2zgodaam.com.
The insurance pilot has been executed across 3 states and 28 districts by Arya. Under this, Arya’s designated warehouses are mapped to block-level gridded weather data of the Indian Meteorological Department to enable the insurance coverage. This helps in protecting professional warehouse operators from the financial downside of paying rent despite low utilization in case adverse weather leads to lower commodity arrivals.
Ritesh Raman, General Manager, Arya said, “The facility will give confidence to warehouse business partners of Arya to offer competitive rates to its clients. Further, it's one of a kind solution started in India to avert the utilisation risk to warehouse owners arising from adverse climate conditions. Based on the pilot learnings and experience, we fully intend to further fine-tune and scale up the program offering with AICIL in association with Gramcover which worked closely with us on the product contours and structuring.”
Arya provides end to end post-harvest commodity management and financing services for smallholder farmers, FPOs and other stakeholders in remote agricultural markets enabling them to avoid distress sale of Agri commodities.
Registered as a composite insurance broker at the Insurance Regulatory and Development Authority of India (IRDAI), Gramcover was founded in 2016. As a rural-focused insurance broking firm, Gramcover leverages technology and a point of sale partner network to make insurance available to all. The company has adopted a unique technology-led distribution & servicing model well suited for rural set up to minimize the inefficiencies and transaction costs involved in the process.
