Thai Rice Insurance Scheme scales up to cover 2 million rice farmers
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Thailand is amongst the world's top rice exporters. Rice is generally cultivated across the entire country and huge parts of Thailand's population earn their living from rice farming. For centuries, farmers' livelihood and rice production have been plagued by natural disasters such as floods and droughts. To cushion the rural population against destructive weather conditions, a Government Disaster Relief Programme was launched a decade ago to provide financial assistance to farmers affected by disasters.
"Experience shows that crop insurance schemes are often caught in the trap of being too costly on administration during the early stages, while still lacking the critical mass of policies to make them a sustainable proposition for the key stakeholders, namely government, insurance companies and farmers," explained Thomas Kessler, Head of Southeast Asia and East Asia, Global Partnerships. "To address that, Swiss Re has worked actively with the Thai government in the course of 2015 and early 2016 to find ways of overcoming these obstacles and scaling up the scheme."
The efforts have been successful, and the Thai Rice Insurance Scheme has now been approved for a milestone budget of THB 3 billion (USD 90 million), with an aspiration to cover 2 million rice farmers cultivating an acreage of 30 million rai.
Harini Kannan, Head Agriculture, Asia Pacific (ex China), Property & Specialty Underwriting, said that Swiss Re will continuously collaborate with the 16 local insurance companies involved in the scheme, to improve this nation-wide reinsurance programme. "This means the scheme will be covering more types of crops, and that the policy will be upgraded to include the total production cost put in by the farmers, allowing them to re-cultivate the entire crop should they be struck by disaster."
The Thai government will also be looking to extend its risk transfer and risk financing solutions more broadly, in order to help reduce dependence on disaster relief funds and make its farmers and the country as a whole more resilient to shocks.