1. BASIX Equity for Equity Research to Design a Product that suited the poor: BASIX’s Experience International Conference on Rural Finance Research Moving Results into Policies and Proctices Rome, 19-21 March 2007

2. BASIX Equity for Equity Need for crop insurance…  We recognized that rural poor face high risk in agriculture  Inquired about possibility of insurance  Review of literature and discussion with Insurance companies revealed: Has not worked almost anywhere Dispersed production: High cost of delivery High cost of assessing risk High Covariant risk

3. BASIX Equity for Equity Going back to people…  Wanted people to administer insurance  People were willing to pay 1/6 th of the production as premium  Were not willing to assess losses  Three elements of the risk: Price Risk Risk arising from factor conditions Risk arising from inadequate effort, skills

4. BASIX Equity for Equity New thoughts on design…  Segregate the different risks  Insure for those that can be measured  Most significant factors that could affect production: Rainfall Pest control  Looking at the measurability and mixing with the effort variable, we decided to work on Rainfall

5. BASIX Equity for Equity Research to design product  30 year Rainfall and Agricultural Production data collected and analyzed along with the actuarial team of ICICI Lombard introduced to us by World Bank – Commodity Risk Management Group  Established relationship between rainfall in different geographical area for different crops  Pilot testing in 12 villages in one district

6. BASIX Equity for Equity Scaling up  Encouraging Result: Insurance claims of 154 f armers settled in the year  Second year: offered the package in 3 districts New crop-rainfall relations had to be studied Rainfall measurement stations not there: Explored new but affordable weather-stations  Claim Pay-outs of ICICI Lombard was met from the premium collected: Right pricing  Third year: Offered in 30 locations including with Non-BASIX partners covering 100,000 farmers

7. BASIX Equity for Equity Thereafter…  This product had to be approved by IRDA  Nine other ‘poor friendly’ products designed by BASIX in collaboration with 3 insurance companies: covering risks of Life, Health, Agriculture, Livestock, Non-farm Enterprises  Membership in the Board of IRDA, the countries top regulatory authority  Today there are 500,000 farmers insured: Not solely bundled with our loan products  7,000+ insurance claims settled till now