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Agricultural Insurance Feasibility Study for Nepal

Topic :

This work aims to provide an overall framework for the development of sustainable market-based agricultural insurance for small and marginal farmers in Nepal. It relies on the following components:

  • Review of agricultural insurance in Nepal. While the formal insurance sector does not offer agricultural insurance products, some entities are involved in providing insurance protection, which is usually linked directly to their credit operations.
  • Agricultural risk assessment. A formal crop and livestock risk assessment is performed. It is intended to assist policy makers and insurance practitioners in the planning, design and rating of crop and livestock insurance. This assessment is essential in developing technically and financially sound agricultural insurance products.
  • Agricultural product development. An analysis of suitable agricultural insurance products is conducted, for both crops and livestock. It identifies products that could be developed and piloted in a second phase.
  • Operational issues for agricultural insurance. Operational challenges for the development of agricultural insurance are discussed, including underwriting, distribution, and loss assessment.
  • Institutional challenges. The emergence of a sustainable market-based agricultural insurance program entails support from the government in creating an economic and legal environment that attracts private insurers and provides farmers with the incentives to engage in risk-financing strategies. It includes, among others, the development of risk market infrastructure, such as efficient data collection and management systems, appropriate regulatory and legal framework, effective information and education programs, and the development of local technical expertise.

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