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SUMMER INTERNSHIP PROJECT REPORT On Process Documentation on Rainfall Insurance in the Districts of Ahmadabad, Anand and Patan in the

form of Case Studies In

SEWA (Ahmadabad, Gujarat) Under the Guidance of Industry Mentor Ms. Chhaya Bhavsar Coordinator Rainfall Insurance (Ahmadabad, Anand, Patan) SEWA, Ahmadabad Submitted by Apoorv Jain PGDM (Insurance and Business Management) Roll No-10IN608 BIMTECH Faculty Mentor Prof. K.K Krishnan Professor (CIRM) Chairperson, Placement & Training BIMTECH, Greater Noida

ACKNOWLEDGEMENT Making a project especially on an alien topic like Rainfall Insurance could have been a Sisyphean task but I am very lucky to be under the guidance of very kind and knowledgeable people who made this task very easy and knowledge gaining. I would like to express my sincere thanks to Ms Chhaya Bhavsar, Coordinator Rainfall insurance , SEWA Ahmadabad who not only helped me in making this project report but her vast experience in the field of Rainfall Insurance helped us to learn a lot from her practical experience, her support was priceless. I am deeply thankful to Prof. K.K Krishnan, Chairperson, Placement & Training, BIMTECH my faculty mentor. He had been a constant source of knowledge, motivation and suggestions and his priceless advices made this Internship Project a success. I am also thankful to Ms Daxaben Patel (Marketing team leader, Ahmadabad), Ms Hemaben (Marketing team leader, Anand), Ms Deviben (Marketing team leader , Patan) whose constant support is unforgettable. I am also thankful to all the Aagewans in the district of Ahmadabad, Anand and Patan. I am also thankful to all the staff members of SEWA, Ahmadabad whose support and advices are commendable. I am thankful to all my faculty members, friends and family members whose constant support had made this project report complete and successful. Last but not the least; I would also like to thank the Birla Institute of Management Technology, for providing me the opportunity to do a project with SEWA.

TABLE OF CONTENTS
S No 1. a) SEWA b) CMF c) AIC 2. 3. 4. 5. 6. 7. 8. 9. 10. Introduction Executive Summary Rainfall insurance in India Comparison Rainfall and crop insurance Rainfall Insurance at SEWA Results Analysis Research Methodology Case Studies a) Rainfall Insurance-A move forward or a step backward b) SEWA Card- A boon or a bane c )Aagewan- The front fighters d) SEWA- A Grand Brand e) Happy Faces- Payouts 11. 12. 13. Recommendations References Appendices a)53 b)56 c)58 d)61 e)63 66 68 69 Contents Companys Profile a)4 b)8 c)11 12 15 16 18 20 34 49 52 53 Page No. 4

1) COMPANYS PROFILE
a) SEWA

SEWA is a trade union registered in 1972. It is an organisation of poor, self employed women workers. These are women who earn a living through their own labour or small businesses. They do not obtain regular salaried employment with welfare benefits like workers in the organised sector. They are the unprotected labour force of our country. Constituting 93% of the labour force, these are workers of the unorganised sector. Of the female labour force in India, more than 94% are in the unorganised sector. However their work is not counted and hence remains invisible. SEWAs main goals are to organise women workers for full employment. Full employment means employment whereby workers obtain work security, income security, food security and social security (at least health care, child care and shelter). SEWA organises women to ensure that every family obtains full employment. By self-reliance we mean that women should be autonomous and

self-reliant, individually and collectively, both economically and in terms of their decision-making ability. At SEWA we organise workers to achieve their goals of full employment and self reliance through the strategy of struggle and development. The struggle is against the many constraints and limitations imposed on them by society and the economy, while development activities strengthen womens bargaining power and offer them new alternatives. Practically, the strategy is carried out through the joint action of union and cooperatives. Gandhian thinking is the guiding force for SEWAs poor, self-employed members in organising for social change. We follow the principles of satya (truth), ahimsa (non-violence), sarvadharma (integrating all faiths, all people) and khadi (propagation of local employment and self reliance). SEWA is both an organisation and a movement. The SEWA movement is enhanced by its being a sangam or confluence of three movements : the labour movement, the cooperative movement and the womens movement. But it is also a movement of self-employed workers : their own, home-grown movement with women as the leaders. Through their own movement women become strong and visible. Their tremendous economic and social contributions become recognised With globalization, liberalization and other economic changes, there are both new opporunities as well as threats to some traditional areas of employment.

SEWA SERVICES 1. SEWA Bank

2. Legal Services 3. Health Care 4. Capacity Building of SEWA members 5. Childcare 6. Housing and infrastructure 7. VIMO SEWA (SEWA insurance) 8. Video SEWA

Supportive services like savings and credit, health care, child care, insurance, legal aid, capacity building and communication services are important needs of poor women. If women are to achieve their goals of full employment and self-reliance, these services are essential. Recognising the need for supportive services, SEWA has helped women take a number of initiatives in organising these services for themselves and their SEWA sisters. Many important lessons have been learnt in the process of organising supportive services for and by poor women. They provide these services in a decentralised and affordable manner, at the doorsteps of workers. Further, supportive services can be and are themselves a source of selfemployment. For example, midwives charge for their services and creche workers collect fees for taking care of young children. Also, women are ready to pay for the services and in fact, this results in the financial viability of the supportive services. They do not have to be totally dependent on subsidies and grants. Some supportive services like savings and

credit, health and child care have formed their own co-operatives. these cooperatives have gained operational self sufficiency. SEWA bank has achieved financial viability for many years now, while the other cooperatives are steadily moving towards this. SEWA adopts an integrated approach towards organising. The elements of this approach are: Organizing: The poor need to organize (through their associations) for collective strength and bargaining power and to be able to actively participate at various levels in the planning, implementation and monitoring processes of the programmes meant for them. Capacity building: To stand firm in the competitive market, the poor need to build up their skills, through access to market infrastructure, access to technology, information,education, knowledge and relevant training (accountancy,

management, planning, designing etc.) Capital formation: Asset ownership is the surest way to fight the vulnerability of poverty. The poor need to create and build up assets of their own at the household level through access to financial services (savings, insurance and credit). Social security: To combat the chronic risks faced by them and their families, the poor need healthcare, childcare, shelter and relief. SEWAs model of livelihood finance: SEWA did not have a rigid formula for its initiatives in the districts it worked in. Its method of working relies on organizing its members, involving them and

working with (rather than for) them to equip them in their fight against poverty and improve their quality of life. SEWAs philosophy, which is very demand-driven in its approach, could be articulated in four broad steps. Organize women and through the strength of numbers instill in them the belief that they have a say in improving their lives. Empower them to speak up about the issues afflicting them. Enlighten them with the relevant knowledge and encourage them to debate solutions for he issues they face. Take up the specific demands made by the members and facilitate their efforts towards meeting them.

Credibility, trust and ownership are the foundation upon which SEWA builds the structure.
Years of poverty and oppression builds in the villagers a high degree of helplessness and vulnerability and any outside intervention is viewed with suspicion. Theres also a high resistance to any change to their precarious household situation wherein they barely make ends meet. SEWA has faced this in every district it has worked in. For instance, in Surendranagar, when SEWA set up the first child care center for the children of the salt farmers, the women were reluctant to leave their children in the custody of SEWA caretakers. They believed that their children would be kidnapped or even poisoned. It took SEWA organizers a lot of effort to convince

the women that leaving their children with SEWA would allow them to concentrate better on salt-farming activities and would eventually result in a better quality output and a higher income. It took a lot of courage for the first few women to risk leaving their children in the custody of these outsiders. Typically, it is the first few converts that are the hardest. SEWA has persisted anywhere from three months to a year to establish rapport and trust and convince the first volunteer. Things become far easier when at least one household has had a positive experience. In fact it could often be left to the word-of-mouth system of the village to get more believers organically. For instance, it took almost a year to establish one child care centre in Surendranagar district. The very next year, five more centres were established and in two more years, there were 21 centers in the area. Building credibility takes time and persistent efforts. Organizing is a process, an investing in organizing requires time and resources, but once the acceptability is gained, the momentum is far greater, the membership graph far steeper.

b) CENTRE OF MICRO FINANCE

The Centre for Micro Finance (CMF) is a non-profit, non-partisan research centre housed within the Institute for Financial Management and Research in Chennai. The mission of the Centre for Micro Finance is to improve the accessibility and quality of financial services for the poor through rigorous research, knowledge dissemination and evidence-based policy outreach. CMF currently employs 38 full-time staff and around 160 surveyors and consultants working on 19 randomized evaluations and 25 additional research projects throughout India.

Over the past few years, Indian microfinance has witnessed unprecedented growth. In addition, many microfinance institutions have begun to offer products such as health and life insurance and to experiment with new technology such as mobile phones, point of sale devices, and smart cards. Yet critical gaps remain in our knowledge of how to deliver microfinance services most efficiently and how microfinance can best be used as a tool to fight

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poverty. The Centre for Micro Finance was established in 2005 to help fill these gaps. To achieve these objectives the Centre works in partnership with various MFIs in India, banks, donors, investors, training institutions and several academic institutions in India and abroad, including Massachusetts Institute of Technology (MIT), Yale, Harvard, New York University (NYU) and Indian School of Business (ISB). CMF also works actively with Indian regulators, policymakers and other stakeholders to disseminate results from its work and help shape the policies and donor paradigms that frame the sector. Research Areas (1) impact evaluation of credit and savings products (2) microfinance plus (how to effectively combine microfinance with other development interventions and non financial services) (3) insurance and innovative products (4) sector wide and policy issues, such as regulations or the impact of competition. CMF also undertakes long-term research on broad development issues through longitudinal studies, including its flagship project, the Tamil Nadu

Socioeconomic Mobility Survey. To date, the Centre for Micro Finance has

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conducted over sixty research projects in all corners of India. In addition to research that we design and in which we are actively involved, CMF also occasionally serves as a Research Knowledge Partner for individuals and entities who leverage the expertise of our field infrastructure to conduct their own studies.

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c) AGRICULTURE INSURANCE COMPANY OF INDIA LIMITED

Agriculture Insurance Company of India Limited (AIC) has been formed at the behest of Government of India, consequent to the announcement by the then Hon'ble Union Finance Minister in his General Budget Speech FY 2002-03 that, "to subserve the needs of farmers better and to move towards a sustainable actuarial regime, it was proposed to set up a new Corporation for Agriculture Insurance". AIC has taken over the implementation of National Agricultural Insurance Scheme (NAIS) which, until FY 2002-03 was implemented by General Insurance Corporation of India. In addition, AIC also transacts other insurance businesses directly or indirectly concerning agriculture and its allied activities. Varsha Bima covers anticipated shortfall in crop yield on account of deficit rainfall. Varsha Bima is voluntary for all classes of cultivators who stand to lose financially upon adverse incidence of rainfall can take insurance under the scheme. Initially Varsha Bima is meant for cultivators for whom National Agricultural Insurance Scheme (NAIS) is voluntary.

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2) INTRODUCTION

Individuals and households in rural India are vulnerable to substantial risks. Among the most severe is the risk that drought or excessive rain can cause crop failure, leading to substantial hardship. Economic activity in many rural areas is very sensitive to the quality of the monsoon. Because a negative weather shock affects virtually all households in a region, many of the coping mechanisms (informal insurance, credit, increasing labor supply) are of limited value. While local insurance has limited ability to insure against local shocks, larger financial markets, can in theory provide complete insurance. Recent innovations in the insurance sector have led to the development of rainfall insurance, which may dramatically improve the livelihoods of rural poor (both farmers and landless labourers), by substantially reducing their vulnerability to adverse weather conditions. However, a substantial barrier to the success of rainfall insurance is the limited experience rural poor have with financial services. The concept of an insurance policy, based on a weather station they do not observe, which provides payouts only in some states of the world, is a difficult one, and individuals may be reluctant to purchase products with which they have limited familiarity. Risks in Indian Agriculture Yield risk

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Rainfall is the major yield risk factor in Indian Agriculture. This is because the irrigation system is inadequate and unreliable. Price risk Price risks are important when farmers are producing for the market. For small farmers this would be especially relevant with specialization. Prices are influenced by demand and supply factors. Food crops and vegetables are generally subject to gradual and predictable changes in demand. Strategies to cope up with these risks Households have of course developed a variety of mechanisms . savings, formal and informal insurance, borrowing, choice of economic activity, and choosing to work more hours .to cope with these risks. Many of these coping strategies are far from ideal, however. Savings typically earn low rate of return. Borrowing from moneylenders may help smooth consumption, but these loans come at very high cost. Perhaps most importantly, weather shocks are aggregate shocks, meaning all households in a given agricultural region require assistance at the same time. But a better approach is to buy a insurance policy and cover the risk i.e. Rainfall Insurance. Rainfall insurance is a contract which pays policy holders if accumulated rainfall

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during a period falls outside prescribed bands. The contract speci.es a weather station at which rainfall is measured, along with start and finish dates, and the payout in case of deficit or excess rainfall.

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3) EXECUTIVE SUMMMARY Rainfall Insurance is sold by SEWA in the districts of Ahmadabad , Anand and Patan from the year 2006 onwards getting tie up with insurance companies like ICICI Lombard General Insurance , IFFCO Tokio General Insurance and now with Agriculture Insurance Company of India Limited in different years. My project is related to the preparation of process documentation in the districts of Ahmadabad, Anand and Patan by using the secondary data of previous years i.e 2006 , 2007, 2008, 2009 and 2010 and using primary data collected through questionnaire in perception mapping of the customers that why are they buying the policy and reasons for not purchasing the policy by using detailed personal interview with a defined set of questions. I have used exploratory research as my research methodology in preparing the project report. To conclude I have prepared some case studies which are the outcomes from this project. The topics for case studies are as follows: 1. 2. 3. 4. 5. Rainfall Insurance- A move forward or a step backward Aagewan-The front fighters SEWA Card- A boon or a bane SEWA- A Grand Brand Happy faces Payouts

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4) RAINFALL INSURANCE IN INDIA


In 2003, Hyderabad-based micro-finance institution BASIX and Mumbai-based insurance company ICICI Lombard, with technical assistance from CRMG, launched the first pilot program for index-based weather insurance in the developing world in the Mahahbubnagar district of Andhra Pradesh. This pilot program sold weather insurance policies protecting against low rainfall to 200 groundnut and castor farmers. In 2004 BASIX incorporated farmer feedback into the design of the second generation of improved weather insurance products that were sold to over 700 farmers, several of whom were repeat customers from the 2003 pilot. In 2005 BASIX scaled up the program further, selling over 7,600 policies in 36 locations in six Indian states. These new policies were refined versions of the 2004 products and offered improved risk management features for farmers, but had a generic, standardized structure which made it easier for BASIX to retail to many clients in many locations. Intense training sessions with loan officers, who became literally one-stop-shop customer service agents, allowed BASIX to offer a large array of rainfall insurance products to its farmer clients. In 2006, BASIX sold rainfall and multi-peril weather contracts including temperature and relative humidity to over 11,000 customers. Since 2003, the Indian weather insurance market has grown rapidly. Four insurance companies have sold weather insurance policies to farmers. Indian weather risk has been reinsured into the international risk markets. For the 2005 monsoon season, a

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leading Indian seed company bought a bulk weather insurance policy so that it could attach free weather insurance coupons for a minimal level of drought coverage to its cottonseed packets which were sold to 100,000 farmers in Maharashtra.

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5) COMPARISON OF RAINFALL INSURANCE WITH CROP INSURANCE


One might reasonably ask why insurance companies are selling rainfall insurance, rather than crop insurance, as rainfall insurance suffers from substantially greater basis risk. In this sub- section, we briefly discuss the advantages and limitations of rainfall insurance relative to crop insurance. Rainfall insurance has at least two important advantages.

First, relative to crop insurance, transaction costs are significantly lower. There is no need to hire individuals to verify crop production (nor to hire individuals to monitor the claims adjusters, etc.). This is a significant advantage, as it can be very costly to hire and monitor individuals with the requisite human capital to work in rural areas. In contrast, rainfall insurance pays out based on the reported index. The only cost is the weather monitoring station. Low transaction costs make it feasible to offer very small policies, particularly if a non-profit organization provides the marketing services.

Second, rainfall insurance avoids some problems of asymmetric information. Crop insurance in India is not linked to individual farms: rather, the government selects (presumably at random) test farms, on which it measures output loss. Thus, there is no direct moral hazard or adverse selection. However, agricultural output is difficult to model. To the extent that the government does not correctly price

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insurance (perhaps because of incomplete or incorrect price models, or possibly political pressure), farmers in underpriced areas may purchase more than in areas where it is relatively overpriced, exacerbating the cost of mispricing mistakes.

Third, rainfall risk may be easier to model, and therefore for insurers to reinsure. Historical rainfall data are generally of good quality, and much more plentiful than data on crop output.

Rainfall insurance also has several disadvantages.

The first, and likely most important, is basis risk. Crop output is not perfectly correlated with rainfall. Moreover, households may experience different rainfall patterns than those measured at the weather station. (For this reason, insurance is typically not sold to households more than 30 km from the rainfall station). Finally, policy-holders face all sorts of other risks to agricultural productivity, such as pests and fooding, which are not covered by rainfall insurance.

Second, rainfall insurance is complicated: it is much easier to explain crop insurance or life insurance than rainfall insurance. Farmers may not have a good concept of what a millimetre of rain is, or what range of rainfall outcomes are likely to obtain. Many have limited numeracy skills, which makes even calculating a payout complicated. Some individuals may not trust private financial markets.

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6) Rainfall Insurance at SEWA


In 2005, the Self-Employed Womens Association (SEWA), began offering rainfall insurance to its members. In 2006, they expanded marketing efforts, offering insurance to 33 villages, selected randomly from a list of 100. In 2007, 17 more villages were added, bringing the total number of villages in which insurance was offered to 50. In offering the insurance, SEWA randomly varied the marketing messages, allowing a test of framing effects. Finally, marketers offered a range of discount coupons. This variation, combined with a panel survey of 1,500 households, allows us to answer questions about the demand for insurance, how psychological and social factors affect purchase decisions, and, in the longer-term, the causal impact of insurance on household investment decisions, consumption smoothing, employment decisions, and welfare. The insurance company which provided rainfall insurance with SEWA in different years are: Year 2006 2007 2008 2009 2010 Company ICICI Lombard IFFCO Tokyo ICICI Lombard AIC AIC

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Year wise a brief decryption of policy:

2006 SEWA chose to offer the product in collaboration with ICICI Lombard General Insurance Company because of its experience in the field. The company has been offering this product to the villagers of Andhra Pradesh with the help of BASIX since 2003. The insurance product was divided into three phases viz. sowing, growing, and harvesting. The policy was given for both the excess as well as deficit cover. The decision was invariably left on farmers to decide which cover they want to take. The product was offered to 11 villages of Patan, 11 of Anand, and 11 of Ahmadabad Districts.

The sowing period started according to the calendar day in the month of June 2006 when cumulative rainfall for the month of June at reference station was observed 50 mm. This was when the actual sowing period starts, but farmers sow seeds by estimating the moisture of the soil, and only a few were able to estimate the minimum rainfall required for sowing. This period continued for 35 days.

The growing period follows the sowing period. This period continued for 35 days.

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In both the phases the strike and exit limits are different for the excess and deficit cover. However, in the 3rd phase (i.e. harvesting phase), the strike and exit limits are same for both the excess and deficit cover. The harvesting phase continued for 40 days, which ended the policy period. The premium charged was different for the excess and deficit cover and was also dependent on the vulnerability characteristics of the area. Hence all the 3 districts had different premiums. In Ahmadabad District the premiums were: High Rain: Rs. 197 Low Rain: Rs. 144 Anand District the premiums were: High Rain: Rs 204 Low Rain: Rs 155 Patan District the premium was Rs 257 for both excess and deficit rainfall. The maximum limit payable was Rs. 500 for each of the three phases. The trigger for each phase is set at different levels for each district. Marketing Strategies: SEWA district coordinators trained a group of SEWA members to be team leaders, who assisted in educating villages about rainfall insurance and organized meetings at the district and inter-district levels. The leaders distributed marketing

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materials (patrika) in villages (grassroots) and gave presentations to households expressing interest in the insurance product. They also coordinated with CMF in the operations giving feedback. The following marketing techniques were adopted:

PATRIKA: A document giving the detailed explanation of the policy was given to increase the awareness of the product. Endorsement from figure of authority Probability of payoff (2 of last 10 yrs vs. 8 of last 10 yrs) Positive / negative messages (protection vs. calamity) Peer Authority (learn about products from different people, farmer)

Benefits of the approach: Relative prices in products is not the only indication of take-up Cost effective way of determining what affects take-up of insurance. Alternative theory of behavioral economics - use market manipulation

2007 In 2007, SEWA offered the product in collaboration with IFFCO TOKIO General Insurance Company. This year only deficit rainfall cover was offered. The premium was significantly lowered in all three districts. However it was not the

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same for all three districts. The lowest premium was charged in Ahmadabad District of Rs 44 and Anand District has a premium of Rs 72 and Patan district has a premium of Rs. 86. However the number of policies sold was highest in Patan (396) and lowest in Ahmadabad District (293). The number of villages in which the product was offered in Ahmadabad District was increased to 14. However two villages that were offered policy in year 2006 (Kamod and Bisalpur), were not offered it in 2007, and five new villages were added to the list. According to the survey and feedback from the team leaders, it was determined that the premium in year 2006 was too high for the villagers. Moreover, they did not get anything in spite of suffering loss due to irregular rainfall. So SEWA negotiated a contract with the IFFCO Tokyo which involved charging a very low premium compared to the 2006 premium. However, it also provided less coverage, as only deficit rainfall was covered. Marketing Strategies: While no surveying was done in 2007, new marketing techniques were adopted in addition to: Brainstorming session with grassroots and marketing team to evaluate past experiences More training, longer marketing time, and individual meetings to bolster connections.
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The new marketing techniques that were adopted included: 1) Four different types of flyers: (total 2,371) These flyers explained the adverse effects of variations in rainfall and made them realize the need for the rainfall insurance product. It also explained the various details of the policy, like sum insured in different phases and premium charged. It also explained the number of policies a farmer should take according to his land holdings. 2) Video tapes: SEWA used video players (similar to video iPod) to provide a concise marketing message. It improved the understanding of the product in the minds of the villagers. This was one of the most effective marketing strategies and it illustrated the product visually, which was very useful in increasing the take-up of the policy. 3) Discount coupons: Aside from the information campaign, monetary incentives were offered to entice take-up and mitigate the monetary constraints of clients. This came in the form of discounts/rebates. SEWA offered coupons of Rs. 5, 15, 30 on the premium of rainfall insurance.

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2008 In 2008, SEWA again partnered with ICICI Lombard to give both the excess as well as deficit cover. The coverage was granted from July 1st to September 28th. The product design was similar to that of 2006. However the policy was granted as one phase only. The maximum claim payable was Rs. 1000. The premium charged was Rs. 190. The premium amount was same in all the 3 districts. However, there was variance in strike and exit levels for Ahmadabad, Anand and Patan depending on weather station reporting levels. The product was offered to the same 14 villages in Ahmadabad district. No new villages were added.

Marketing Strategies: The same marketing team went to the same villages to maintain connections and the marketing material was similar to second year (2007). More variation in flyers was used to improve understanding of the product. There were new village-wide meeting interventions, showing video on a large-scale to all in the village. This increased exposure to insurance, and central meetings hoped to increase villagers trust in insurance. Discount coupon

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If someone attended four village level meetings, they got a discount coupon of 5 Rs. There were discounts of up to Rs. 60 and 90 for those who purchase insurance. This was done to encourage people to take more than one policy. Renewal Gifts Incentives were given to the policyholders of the previous years in the form of gifts. A renewal gift of a higher amount was given to policyholders in first year, as in the first year premium was relative high. No claim amount was given for the 2 consecutive years, so this marketing strategy was adopted to increase the take-up of the product. The gift amount was relatively small for households but still may have caused extra insurance take-up. The gifts were given in November 2008, so the effect can be measured this year. 2009 In year 2008, farmers suffered huge losses due to excessive rainfall. SEWA did not cover the period in phases, but instead covered the whole period. When the farmers suffered losses, SEWA did not pay, but would have paid if the cover was granted in phases. SEWA identified the worst-hit taluka in each of the three districts and paid Rs. 570 to each of the policyholder. So this year, SEWA negotiated a contract with Agricultural Insurance Company of India Ltd. (AICIL introduced Rainfall Insurance Scheme known as "Varsha Bima" during 2004 South West monsoon period and offered the product to various villages of Andhra Pradesh, Karnataka, Rajasthan and Uttar Pradesh).

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The policy is divided in three phases. In the 1st and 2nd phases, cover against deficit rainfall is given and in 3rd phase cover against excess rainfall is given. The policy period for Ahmadabad District starts from 11th June 2009 and will end at 31st October 2009. The policy in this year is designed on the taluka basis of each district and hence strike and exit limit is different for each taluka within a district. Rainfall measurements being taluka-based means: More representative of the rainfall measurements in villages Villages are on an average about 10 kms away from the weather stations This year premium was Taluka based: DISTRICT AHMADABAD TALUKA Daskroi Sanand Dhandhuka Barvala PATAN Radhanpur Santalpur Sami ANAND Anand Anklav Borsad Nadiyad Petlad Umreth Khambhat Premium(Rs.) 130 130 140 145 195 180 180 145 135 160 140 150 140 135

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For every village, taluka boundaries are overridden and closest weather stations are chosen for measurement basis. This is done to reduce some basis risk as a weather station for a particular village is chosen at its minimal distance and it increases the probability of better measurement of risk. In this year, a total of 18 villages will be offered the product as compared to the 14 in last year. The 18 villages of Ahmadabad District fall in 4 talukas. The reference weather station for some talukas is GSDMA and for others it is IMD. All the basic marketing materials re to be used in this year are the same as used in previous years except for discount coupons, which are replaced by scratch cards. Scratch Cards: A method of offering discount coupons in which there is a set of options on a scratch card, which ultimately will give monetary incentives to the buyer. The villages that were offered the rainfall insurance product in 2008: 1. Andej 2. Bareja 3. Bilasiya 4. Bakrol 5. Chekhla 6. Jaitalpur 7. Kubadthal 8. Ode
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9. Pardhol 10. Pasunj 11. Timba 12. Meroli 13. Vahelal 14. Undrel The villages added in 2009 include: 1. Gaaf 2. Vadiyad 3. Polarpur 4. Bhimnath Marketing Strategies: They follow the same trend of flyers this year also to tell the customers about the product. Also the system of video tapes is continued this this year also to attract the customers. A viilage meeting is organized and the of members who are present are noted down and then chits are prepared from those names . Then chit was drawn from the bag . The lucky winner will be awarded with Four Policies.

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A volunteer was selected and mobile number was taken any updates regarding rainfall data will be messaged to that volunteer and that volunteer will inform the villagers. 2010 In 2010, SEWA continued their bonding with Agriculture Insurance company of India Limited (AICIL) who is providing Index Based Weather insurance for Deficit and Excess Rainfall both. The premium amount which was Rs. 150 for all Talukas for both excess and deficit rainfall. The same policy conditions persist this year also at it was in last year i.e. policy period is divided into 3 phases. 1st, 2nd and 3rd phase. Marketing Strategies: Scratch Cards- Scratch card was introduced this year to attract the people. A discount is provided to them for multiple policy purchase. a. Total Discounts worth Rs. 46,54,96 b. 4 policy just in Rs 80 or 120 c. Multiple policy selling to single farmer etc. CMF members are accompanying the Aagewans in doing the field work and making people understand the policy. There is a monitor in every village to monitor the activities of Aagewans and help them.

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There is subsidy on the sale of policy given by NABARD. It is in the form that another policy is given free on purchase of 1 policy. 2011 In 2011, SEWA continued there bonding with Agriculture Insurance company of India Limited (AICIL) who is providing Index Based Weather insurance for Deficit and Excess Rainfall both. The premium amount which was Rs. 195 for all Talukas for both excess and deficit rainfall. The same policy conditions persist this year also at it was in last year i.e. policy period is divided into 3 phases. 1st, 2nd and 3rd phase. Marketing Strategies: Scratch Cards- Scratch card was introduced this year to attract the people. A discount is provided to them for multiple policy purchase. d. Discount of Rs 46,54,96 e. 4 policy just in Rs 80 or 120 f. Multiple policies selling to single farmer etc. CMF members are accompanying the Aagewans in doing the field work and making people understand the policy Game play- A game was organized by fake currency notes to make the people understand the policy payout method.

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7) RESULTS
Policy sold every year Taluka wise

Talukas Daskroi Sanand Barwla Dhanduka Anand Ankalav Borsad Petlad Umreth Nadiad Khambhat Radhanpur Santalpur Sami

2006 162 23 0 0 156 0 4 25 93 101 0 153 191 0

2007 283 10 0 0 152 29 18 45 24 58 0 232 175 0

2008 141 16 0 0 66 35 1 81 1 49 0 153 60 0

2009 415 24 12 8 33 2 6 26 21 9 0 85 98 32

2010 468 15 74 61 389 16 30 53 68 63 29 249 182 28

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1. Daskroi District

600 400 200 0 2006

162 283 141 415 468

2007 2008 2009 2010

Daskroi

POLICY SOLD IN DASKROI TALUKA This is the figure showing the policy sold in the Taluka of Daskroi present in Ahmadabad district from year 2006 to 2010. In year 2008 there is a payout of Rs. 570 therefore you can see a rise in the policy sold next year i.e. 2009 of 415 policies sold. In 2009 there is a payout of Rs. 50 therefore there is a rise in next year policy sold but not at a rate which is there in year 2008. In year 2010 there is payout of Rs. 2 therefore it is expected to be a decrease in policy sold this year as compared to previous years.

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2. Sanand District

23 30 20 10 0 2006 2007 2008 2009 2010 10 16 24 15

Sanand

POLICY SOLD IN SANAND TALUKA This is the figure showing the policy sold in the Taluka of Sanand present in Ahmadabad district from year 2006 to 2010. In 2008, there is no payout in Sanand Taluka but still there is a rise in policy sold in year 2009 from 16 to 24 . In 2009, there is a payout of Rs. 40 but there is a slump in the policy sold next year. In 2010, there is a payout of Rs . 5 , therefore a downfall is expected this year in the number of policies sold.

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3. BARWLA TALUKA

100 0 50 0 2006 2007 2008 2009 2010 0 0 12 74

Barwla

POLICY SOLD IN BARWLA TALUKA This is the figure showing the policy sold in the Taluka of Barwala present in Ahmadabad district from year 2006 to 2010. This scheme is started in Barwla Taluka in year 2009 and only 12 policies sold that year. The payout in year 2009 is Rs. 415 therefore this is huge rise in policy sold next year from 12 to 74 policies. The payout in year 2010 is Rs. 135 therefore a rise in policy sold is expected this tear also.

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4. DHANDUKA TALUKA

100 0 50 0 2006 2007 2008 2009 2010 0 0 8 61

Dhanduka

POLICY SOLD IN DHANDUKA TALUKA This is the figure showing the policy sold in the Taluka of Dhanduka present in Ahmadabad district from year 2006 to 2010. This scheme is started in Dhanduka Taluka in year 2009 and only 8 policies sold in that year. The payout in year 2009 is Rs. 173 therefore there is a rise in policy sold next year from 8 to 61. The payout in year 2010 is Rs. 80 therefore again a rise in policy sold expected this year also.

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5. ANAND TALUKA

400 200 0 2006

156 152 66 33 389

2007 2008 2009 2010

Anand

POLICY SOLD IN ANAND TALUKA This is the figure showing the policy sold in the Taluka of Anand present in Anand district from year 2006 to 2010. The payout in year 2008 is nil therefore there is a slump in policy sold from 66 to 33 in year 2009. In 2009, there is payout of Rs. 215 therefore there is a rise in policy sold from 33 to 389 in year 2010. In 2010, there is payout of Rs. 27 therefore a little bit slump is expected in policy sold this year.

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6. ANKALAV TALUKA

40 0 20 0 2006 2007

29

35

16

2008 2009 2010

Ankalav

POLICY SOLD IN ANKALAV TALUKA This is the figure showing the policy sold in the Taluka of Ankalav present in Anand district from year 2006 to 2010. In 2008, there is no payout therefore there is a massive downfall in policy sold from 35 to 2 in year 2009. In 2009, there is a payout of Rs. 210 therefore there is rise in policy sold in year 2010. In 2010 , there is no payout therefore a slump in policy sold is expected this time also.

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7. BORSAD TALUKA

30 20 10 0 2006

18 1 6

30

2007 2008 2009 2010

Borsad

POLICY SOLD IN BORSAD TALUKA This is the figure showing the policy sold in the Taluka of Borsad present in Anand district from year 2006 to 2010. In year 2008, there is no payout but still there is a marginal increase in policy sold from 1 to 6 in 2009. In 2009, there is payout of Rs. 230 therefore a there is increase in the level of policy sold this year. In 2010 , there is no payout therefore again a slump in policy sold is expected this year.

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8. PETLAD TALUKA

100 50 0 2006

25 45

81 26 53

2007 2008 2009 2010

Petlad

POLICY SOLD IN PETLAD TALUKA This is the figure showing the policy sold in the Taluka of Borsad present in Anand district from year 2006 to 2010. In 2008 there is no payout therefore there is downfall in the policy sold from 81 to 26 in year 2009. In 2009, there is payout of Rs. 150 therefore a rise can be seen in policy sold in year 2010. In 2010, there is payout of Rs.154 therefore again a rise in policy sold is expected this year also.

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9. UMRETH TALUKA

93 100 50 0 2006 2007 2008 2009 2010 24 1 21 68

Umreth

POLICY SOLD IN UMRETH TALUKA This is the figure showing the policy sold in the Taluka of Umreth present in Anand district from year 2006 to 2010. In 2008, there is payout of Rs. 570 therefore a rise in policy sold can be seen from 1 to 21 in year 2009. In 2009 there is payout of Rs. 380 therefore again a rise in policy sold can be seen in year 2010. In 2010 there is a payout of Rs.106 this can move the policy sold graph in any of the direction this year but is still expected to be in positive direction.

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10. NADIAD TALUKA

101 150 100 50 0 2006 2007 2008 2009 2010 58 49 9 63

Nadiad

POLICY SOLD IN NADIAD TALUKA This is the figure showing the policy sold in the Taluka of Nadiad present in Anand district from year 2006 to 2010. In 2008, there is no payout therefore there is a decline in number of policies sold in year 2009. In 2009, there is no payout but still there is rise in policy sold this year. In 2010, there is payout of Rs. 9 therefore it is expected to be a downfall in number of policies sold this year.

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11. KHAMBHAT TALUKA

30 0 20 10 0 2006 2007 2008 2009 2010 0 0 0 29

Khambhat

POLICY SOLD IN KHAMBHAT TALUKA This is the figure showing the policy sold in the Taluka of Khambhat present in Anand district from year 2006 to 2010. In Khambhat Taluka this scheme had started in year 2010 only. In 2010 , there is a payout of Rs.5 therefore a downfall in policy sold is expected this year.

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12. RADHANPUR TALUKA

300 200 100 0 2006

153

232 153 85 249

2007 2008 2009 2010

Radhanpur

POLICY SOLD IN RADHANPUR TALUKA This is the figure showing the policy sold in the Taluka of Radhanpur present in Patan district from year 2006 to 2010. In 2008, there is no payout therefore there is a slump in policy sold in year 2009. In 2009, there is no payout but there is huge rise in policy sold is a miracle done by the marketing team of Radhanpur Taluka which is personally experienced by me. In 2010, there is no payout this time also but anything can happen this time.

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13. SANTALPUR TALUKA

191 200 100 0 2006 2007 2008 2009 2010 175 98 182

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Santalpur

POLICY SOLD IN SANTALPUR TALUKA This is the figure showing the policy sold in the Taluka of Santalpur present in Patan district from year 2006 to 2010. In 2008, there is payout of Rs. 570 thus you can see a rise from 60 to 98 in 2009. In 2009, there is no payout but still there is a increase in policy sold may be due to payout last time. In 2010, there is payout of Rs. 410 therefore it is expected to be a increase in policy sold next year.

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14. SAMI TALUKA

40 0 20 0 2006 2007 2008 2009 2010 0 0 32 28

Sami

POLICY SOLD IN SAMI TALUKA This is the figure showing the policy sold in the Taluka of Sami present in Patan district from year 2006 to 2010. This scheme started here in year 2009 and 32 policies are sold in that year. The payout in 2009 is nil therefore there is a downfall in policy sold in year 2010. The payout in year 2010 is nil thus a slump is again expected this year.

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8) ANALYSIS
This project mainly done on the responses on the basis of personal interview and analysis is done on the basis of some closed ended questions and rest of the things are covered under case study and recommendations. The analysis is done on the basis of certain questions asked in the questionnaire.

Ques1) What are the factors that intend you to buy the rainfall insurance? Ans) Out of 108 respondents the respone is like this Factors for purchase Good coverage Brand of SEWA Promise of payout Numbers 63 89 97

120 100 80 63 60 40 20 0 Good Coverage Brand of SEWA Factors for purchase Promise of Payout 89 97

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Ques2) How many people are aware of Rainfall Insurance?

Ans) There are 2 tables shown. First is showing the response of the people. Second is showing the response by surveyor on the basis of knowledge and awareness. Response Yes No Numbers 100 8 Response Yes No Partly Numbers 2 28 78

Aware of RI

No 7% Yes 93%

No 26% Yes 2%

Partly 72%

You can get an impression from this figure that how much people really knows about insurance.

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Ques3) Whats the occupation of the respondents? Ans) There are basically 2 occupation of the policy holders i.e. farmer and farm worker among the 108 respondents Occupation Farmer Farm worker Numbers 55 53

49%

Farmer 51% Farmworker

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9) RESEARCH METHODOLOGY
I have used conclusive research as my research methodology. To collect the primary data I have used the measures i.e. 1) Questionnaires 2) Personal Interviews On the basis of convenience of 108 respondents in the district of Ahmadabad (29), Anand (35) and Patan (44) on different basis i.e. diversification in payouts during last year so to avoid biasness. And then done the perception mapping on the basis of the data collected through questionnaires and personal interviews. Performed analysis on different questions 1) Factors responsible for policy purchase 2) Awareness of Rainfall Insurance among customers 3) Occupation of the customers I have used the secondary data provided by SEWA to perform result and analysis on the basis of 1) Policy sold in previous years i.e. 2006,2007,2008,2009 and 2010 2) Payout in years of 2008,2009,2010

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10) CASE STUDY


1. Rainfall Insurance- A move forward or a step backward

SEWA is providing rainfall insurance from year 2006 with tie up with different insurance companies in past years with different terms and conditions every year. SEWA has a tie up with CMF (Centre of Micro Finance) in providing rainfall insurance. Year 2006 2007 2008 2009 2010 Company ICICI Lombard IFFCO Tokyo ICICI Lombard AIC AIC

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No. of policies sold every year is having a huge fluctuation every year. There are different factors responsible for the fluctuation. Year 2006 2007 2008 2009 2010 Policy sold 908 1067 603 781 1775

The factors that can be responsible for this fluctuation can be: Network and the familiarity of the Insurance Provider (Trust) Availability of cash at the time of purchase (Liquidity)
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Distance from the Weather station Payouts in Previous Years Low premium The main factor which is coming as the major reason after the survey done in different villages of Ahmadabad, Anand and Patan is Payouts in Previous Years which is indicating that there is lack of awareness and education about insurance among the people because according to the principal of indemnity in insurance there should be no gain. But people are not aware of it and they are expecting payout every time even in case of good rain. But still SEWA has taken an initiative to provide Rainfall Insurance to the farmers and farm workers so that they should not get much affected due to variation in rainfall. This product is still in its pilot phase and still there are trying to find out the best way to help the farmers and farm workers. Whats the recommendation as a surveyor I have to give for Rainfall Insurance? SEWA should make the people aware and educate them about insurance and then relate it with Rainfall Insurance for that they should first educate their Aagewan about insurance and then Rainfall Insurance.

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2. SEWA Card- A boon or a bane

SEWA Card is a scheme which is recommended by CMF (Centre of Micro Finance) under which discounts are provided on the purchase of policy by the customer. It is only applicable for the previous SEWA members not for the new ones. CMF is applying that scheme under the name of SEWA.CMF is saying that it is based on pure luck and people who are having a good fortune will win in this game. But according to me this is neither a fair scheme nor luck based because the name is already there on the card and the customer can scratch that card only. Therefore the probability of win limits to that card only.

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Another thing which is wrong in that card is that SEWA is providing discount on the customers behalf and SEWA is paying remaining premium from his own pocket which violates the rules of selling insurance. And this scheme is not going to be there forever. Therefore you are making the people addicted to the game and this can cause harm in selling Rainfall Insurance in future.

What recommendation I as a surveyor have to give for SEWA Card? Its not a good move and you are selling insurance on discount violating basic rules of insurance. You are playing with luck in insurance which is not a right thing and diverting from basic meaning of insurance. This is a bit confusing that Aagewans are spending a large share of time in letting the people know how to play the game rather than benefits of buying Rainfall Insurance.

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3. Aagewan-The front fighters

Marketing is one of the most important parts of any organization or company. You made the product but until to take it to the public and check the response its of no use and benefit. Aagewans are the part of marketing team of SEWA who selling different products for them to their members and interact directly with the customers. According to the survey conducted by me almost 100% of the people said that Aagewans are the people who tell us about the exact rainfall value every year. Therefore the importance of Aagewans is huge in an organization like SEWA and their suggestions and feedbacks should be given utmost importance. To have an effective sale of Rainfall Insurance proper knowledge and education about the product has to be given to the Aagewan, so that they could be more confident and efficient in selling the Rainfall Insurance.

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Currently whats happening is that Aagewans are also selling insurance on previous year payouts which is not the right way to sell insurance. Rather they should tell the public about the benefits of insurance and let them know what the importance of insurance is and why it is for?

Whats the recommendation I as a surveyor have to give for Aagewans? Aagewans should be given more education and knowledge about insurance and then relate it with Rainfall Insurance so that selling of insurance could be done efficiently and there could be no misselling. Moreover I wish to suggest that SEWA should try to arrange the meeting of the Aagewans and the insurance company officials so that the officials of the insurance company may elaborate the delicacies of complex thing like insurance. This will help them to clear their doubts related to rainfall insurance and will give them a inner confidence to face the questions of the customers more boldly. This will

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ultimately lead to eradicate the misconception among consumers and will add to the goodwill of SEWA.

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4. SEWA The grand brand

Year-2006 Village-Disar Taluka- Radhanpur District-Patan State- Gujarat A unfortunate event happened in this village when a person using the name of SEWA taken money from the people as a premium who is not an Aagewan nor from SEWA and ran away with the money and never came back. When people from SEWA came there to collect the premium villagers said that they already paid the premium and showed the receipt which after investigation found out that it was fake. After this event normally people will not buy the product again but the brand of SEWA is that much huge people have a blind trust on SEWA that they purchased the policy again. They said that SEWA is like a god for them because at the time of earthquake SEWA was the first to reach there and helped them immensely. They will do whatever SEWA says. The brand of SEWA is very big in that region.

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What is the recommendation as a surveyor I have to give on this Grand Brand of SEWA? If SEWA has a huge reputation in that region their focus should be on upholding that trust and their focus should be on maintaining that brand loyalty.

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5. Happy Faces: Payouts

There are some places in the districts of Ahmadabad, Anand and Patan where the payout is paid on the policy in 2010. TALUKA DASKROI DHANDUKA BARWALA SANAND AHMADABAD NARODA DALDI RADHANPUR SAMI DISTRICT AHMADABAD AHMADABAD AHMADABAD AHMADABAD AHMADABAD AHMADABAD PATAN PATAN PATAN PAYOUT(Rs) 1 80 125 5 1 1 401 0 0

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SANTALPUR VARAHI ANAND ANKLAV BORSAD KHAMBHAT NADIAD PETLAD UMRETH

PATAN PATAN ANAND ANAND ANAND ANAND ANAND ANAND ANAND

401 401 60 0 0 5 9 86 88

We can summarize from this table that in the district of Ahmadabad there is good payout in the Barwala and Dhanduka Talukas , in the district of Patan there is good payout in the Daldi, Santalpur and Varahi districts and same with Anand districts there is good payout in the district of Petlad and Umreth. Therefore there is a huge response for buying policy this year also and people are saying the customers are saying that they are very happy with the payout. They are poor farmers and farm workers and a little bit of payout will make them happy. Vice-versa there is a opposite response in the districts where the payout is not that much or nil. People are hesitant to buy the policy again and there is a negative response to the policy.

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Example : In Polarpur village of Barwala Taluka , out of 18 people visited in a day 17 of them purchased the policy and the one who had rejected the policy is not because she is not satisfied rather she is not well mentally. On the other hand, In Bilasia village of Daskroi Taluka , out of 15 people visited in a day only 2 had purchased the policy again . So, more payout more level of happiness

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11) RECOMMENDATIONS
1) Training for Aagewan- Aagewan are the one who faces the people and answer their queries therefore it is important that they have knowledge about the policy and conditions so SEWA can organize a training program for Aagewans . Two options are Training from insurance company(AIC) representative Training from people within organisation 2) Making a package policy- SEWA can make current rainfall insurance policy combined with its other health and life insurance . SEWAs other insurance products are quite popular among people so they can make it as a package policy . 3) Discount process easy- The process of giving discounts to the people is quite confusing and difficult and not fair also. So the process of giving discounts to the people should be straight , defined and same for everyone. There should be no luck factor involved in it. 4) Awareness of the product- SEWAs marketing team should be focused on spreading the awareness for the rainfall insurance and making the people educated about the policy. Once the people got aware about the policy benefits it will not be difficult to sell the policy. 5) Marketing team+ Insurance Company- As marketing team is not well aware about policy condition and technical details a insurance company representative should accompany them during the field work in the

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villages and make the people aware about the policys technical knowledge and conditions. This can work as an alternative recommendation to the first recommendation which i have made. 6) Use insurance companys existing material- SEWA can make use of the material used by AIC in the other states where their Rainfall Insurance scheme is running i.e. flyers, brochures and videos in marketing rainfall insurance in villages and can request AIC to convert them in Gujarati.

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12)

REFRENCES

1) Published paper Agricultural Insurance in India: Approaches and Challenges by Debdatta Pal , IIM Ahmadabad.
2) Weather Insurance In Rural India by Xavier Jine and James Vickery of

World Bank. 3) Weather Insurance: Managing Risk Through an Innovative Retail Derivative by Shawn Cole , Jermy Tobacman .

Websites 1. www.sewainsurance.org/Rainfall%20insurance.htm 2. www.ifmr.ac.in/cmf/eomf4-rainfall.htm 3. www.aicofindia.org 4. www.knowledge.wharton.upenn.edu/india/article.cfm?articleid=4198

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13) APPENDIX QUESTIONAIRE


1. In your life have you ever got affected by climate change? Yes No

What kind of climatic change ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------2. Have you ever taken Barsati Bima . If YES please specify the duration. 2006 2007 2008 2009 2010 3. What are the factors influential for taking policy? Good coverage Brand of SEWA Promise of payout Others 4. Have you ever claimed under the policy? Year Excess Deficit 2006 2007 2008 2009 ` ` ` ` AMOUNT SATISFACTION Yes Yes Yes Yes No No No No Neutral Neutral Neutral Neutral

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2010

Yes

No

Neutral

5. If you never claimed, are you satisfied with the cover of Barsati Bima? Yes No Neutral

6. Are you aware of the cover provided by rainfall insurance? Yes Please explain No

By surveyor

Aware

Unaware

Partly aware

7. Who informs you about the actual rainfall value? Aagewan SMS IMD Centers Any other source please specify _________________ 8. Please explain your experience with renewal gifts

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Satisfied

Not Satisfied

Neutral

9. Any experience with rainfall insurance

10. What do you think about the role of CMF( Centre of Micro Finance)

PERSONAL DETAILS NAMEAGESEX_________________________________ _________________________________ _________________________________

OCCUPATION- _________________________________

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