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Volume V Issue I 2019

Volume V Issue I 2019
AN ALTERNATE TO CATTLE INSURANCE

Year:2019 Volume V Issue I

Print ISSN :2454-6542,Online ISSN:2454-6542

Received on:14th Feb 2019, Received in Revised Form:24th March 2019, Accepted On:29th March 2019

Amit Kumar Jena
Pursuing his Fellow Program in Management from XLRI, Jamshedpur

Rajesh Kumar Tripathy
Management Consultant, Co-Founder of Cflex Consulting Services, New Delhi

Corresponding Author: amitjenaxlri@gmail.com

Abstract

In India managing risk in cattle requires a combination of actuarial approach, risk mitigation and financial approach. Actuarial approach will help in calculation of the premium that is to be charged, risk mitigation approach will help in better preparation of improved management of winter and summer pastures, food crop storage. These approaches should be adequately supported by financial mechanism. Traditional indemnity based cattle insurance (based on individual losses) has proved ineffective in India because of high operating cost in remote rural areas; difficulties in valuation- age, health, and productivity; difficulty in identification of the insured animal; monitoring and verification of the tagging; ex ante moral hazard (owners failed to protect their cattle); and ex post moral hazard (owners falsely reported animal deaths); and that apart a huge amount of government subsidies. The alternate method of cattle insurance would include Index-based cattle insurance with use of RFID and veterinarians instead of individual insurance. Index-based insurance can lower administrative costs and reduce moral hazard and adverse selection.

Keywords

Cattle insurance, RFID,Re-insurance, Catastrophic, Risk mitigation, Indemnative pool

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