1. Developments in the Indian Weather Market
Marcel Stäheli
WRMA Annual Meeting
Miami, May 2007

2. Who are we? Specialities
E&CM (Environmental and Commodity Markets)
13 Members (NY, Zurich & Mumbai)
Agricultural Insurance
16 Members (worldwide)
Weather and energy
Emissions
ELPRO (contingent power price option)
Crops
Glasshouses
Forestry, plantations
Livestock
Bloodstock
Aquaculture
Focus on parametric insurance
Focus on indemnity based insurance
Able to combine traditional reinsurance with modern methods of capital markets.

3. Indian Agricultural Production highly dependent upon Monsoon Rainfall
Historical Kharif Rainfall and Crop Production
Irrigation
only 40% of cultivated area accessed by irrigation system
only 20% effectively irrigated
80% depend upon rainfall
Agro Sector
India sustains 16% of the world’s population on 2.4% of land resource
Agriculture contributes 24% of the Indian GDP
Livelihood support to two-thirds of the population
Year 2003: 49% dip in July rainfall – Kharif output fell by 19%, and Agri GDP by 3.1% leading to drop in overall GDP growth *
* Source: Innovative Financial Services for Rural India – Ulrich Hess, July 2003

4. Insured Crops Covered Crops Weather Perils Field Crops
Soybean, paddy, cumin, coriander, fenugreek, wheat etc.
Horticulture Crops
Oranges, grapes, apples, peach etc.
Deficit / excess rainfall
High relative humidity (RH)
Excessively high and low temperatures
Prolonged dry spell
Combination of above

5. Indian Weather Market
UNTIL TODAY over 539,000* Indian farmers have taken weather insurance
MARKET PLAYERS - 8 P&C direct insurers
- Currently active: 1) Agricultural Insurance Corporation of India Ltd.
2) ICICI Lombard General Insurance Company Ltd.
3) IFFCO Tokyo General Insurance Co. Ltd. - Banks expected to join after regulator signed-off on weather derivatives
END USERS - Farmers - Wind farms
- Corporates engaged in contract farming - Hydro power projects - Tea/coffee plantations - Salt production - Sugar producers - Bio-diesel plantations
DISTRIBUTIONS - Banks - Micro finance institutions
CHANNELS - Insurance agents - Kiosk - Brokers - NGO’s - Co-operatives - Self help groups
* Swiss Re Estimate

6. Crop Calendar and Rainfall Pattern
11-24Jun
25Jun-15Jul
16Jul-26Aug
27Aug-7Oct
8Oct-11Nov
Presowing
Seedling
Vegetative
Reproductive
Maturity
2 weeks
3 weeks
6 weeks
40-60mm
50-70mm mm mm
40mm
Water requirement
Stages
Time
Output
50mm
60mm
180mm
190mm
5.5 weeks
Rainfall required

7. Deviation in Rainfall and Impact on Yield
50mm
60mm
190mm
40mm
Loss in yield
90mm
40-60mm
50-70mm mm mm
Water requirement
Stages
Time
11-24Jun
25Jun-15Jul
16Jul-26Aug
27Aug-7Oct
8Oct-11Nov
Presowing
Seedling
Vegetative
Reproductive
Maturity
2 weeks
3 weeks
6 weeks
5.5 weeks
Output
180mm
70mm
Rainfall required
Actual Rainfall recorded

8. Loss Payment through Weather Insurance
40-60mm
50-70mm mm mm
40mm
Water requirement
Stages
Time
11-24Jun
25Jun-15Jul
16Jul-26Aug
27Aug-7Oct
8Oct-11Nov
Presowing
Seedling
Vegetative
Reproductive
Maturity
2 weeks
3 weeks
6 weeks
5.5 weeks
50mm
60mm
Rainfall required
Actual Rainfall recorded
180mm
70mm
Output
Loss payment
190mm
90mm
Retention
Strike
Payout:
(Strike – actual rainfall)
* Notional,
e.g. INR 20 / mm

9. Example of Closed Weather Programme – Term Sheet (1/2)

10. Example of Closed Weather Programme – Term Sheet (2/2)

11. Swiss Re Initiatives in the Indian Weather Market
First deal in 2004 with Basix (microfinance institution) for Castor and Groundnut crop in Mehbubnagar, Andhra Pradesh against deficit rainfall covering 1,500 farmers
since then 36 fac R/I contracts closed; reinsured 272,590 policies
Estimated market growth 2006 to 2007 by ~200%
Offers a viable alternative to the traditional crop insurance market and has the potential to extend beyond the agriculture sector up into the corporate end-user market
Currently working on solutions for agro input providers, wind farms, tea plantations, hydro power projects, sugar & salt production, various crops and vegetables, contract farming etc

12. Contact Information
Swiss Reinsurance Company
Mythenquai 50/60
CH-8022 Zurich
Marcel Stäheli
Director
Head Weather and Energy Underwriting
Phone +41 (0)