Introduction of SOMPO Japan Products - Weather Index Insurance for Agriculture (WIIA) in Thailand -
Sompo Japan, which is the second largest Property and Casualty Insurance Company in Japan, has
produced variety of index-typed products over 10 years period. While the traditional insurance products
compensate the actual loss after the cause of loss has to be duly verified, the index-typed products provide
compensation when the index during the observation period matches the predefined condition, which
makes it possible to pay out compensation at an earlier date.
The Weather Index Insurance for Agriculture (WIIA) is the weather index insurance designed to
mitigate economic losses of rice farmers due to drought in northeast Thailand. Sompo Japan Thailand,
which is our subsidiary in Thailand, commenced the sale of WIIA in January 2010.
In 2007, the Japan Bank for International Cooperation (JBIC) studied the possibility and potential of
Weather Index Insurance for Agriculture together with Sompo Japan and other experts. Following this
study, Sompo Japan produced WIIA in order to verify the effectiveness of the functionality of the insurance
as a climate change adaptation measure.
Economic losses caused by abnormal weather impact agricultural communities where infrastructure
improvements and other disaster management measures are insufficient. Effective adaptation measures
for climate change, including the mitigation of economic damage caused by abnormal weather, require
vast funding. It suggests that private funding via market mechanisms could play a role, in addition to each
nation’s public funding.
Many of the farmers in Thailand’s agricultural regions borrow money from banks prior to commencing
farming operations. There has been a serious problem with farmers being unable to repay their loans due
to decreased crop yields resulting from drought and other such climate associated challenges.
The WIIA will pay out contractually predetermined insurance payments when the observed result of
accumulated precipitation as measured against the Thai Metrological Department accumulated rainfall
index fall below a determined value for the predefined period.
The JBIC supported us to introduce the Bank of Agriculture and Agricultural Cooperatives (BAAC),
which has strong presence in the farming region of Thailand, as our local partner for sales of this product.
The Thai Meteorological Department also supported our project by providing the historical rainfall data
and setting up new observation points since the historical data and reliable observation system is necessary
to develop the insurance product. Thus, public-private partnership was achieved for this project.
Since 2010 the sales area has been expanded from one prefecture to nine prefectures in northeastern
Thailand. The product is revised this year and the number of the insurance contracts sold has been in good
Sompo Japan Group will continue to make efforts to develop and offer new insurance products as
effective adaptation measures for climate change.
|Date of issued||2012-11-28|
climate change adaptation
|Publisher||Japan International Research Center for Agricultural Sciences|
|Rights||Japan International Research Center for Agricultural Sciences|