DNE: Insights from the Livestock Roundtable

Last week, the Centre for Insurance and Risk Management, IFMR, convened a roundtable on Livestock risk that was attended by all the major stakeholders to talk about the various issues and challenges faced by them in bringing effective risk management solutions to livestock owners. The participants involved all the major insurance companies, NGO like PRADAN, apex institutions like NABARD and NDDB, co-operatives like Amul and DRDA, MFI like SKS Microfinance and international organizations like World Bank, ILO and ILRI among others.

The event came at the right time when a number of innovations are being tried out especially with regards to cattle insurance. It was a great opportunity for all the stakeholders connected to the livestock supply chain to get a better understanding of the strengths and limitations of each other and also to discuss models and ideas which can help in developing robust delivery channels for delivering risk management tools to livestock owners. The discussions held and questions raised pointed towards the practical issues in delivering such tools. Difficulties in tackling issues of moral hazard and adverse selection were also discussed at length.

Here are the key highlights of the discussions at the roundtable:

• Lack of dependable information on insured livestock
• Highly specialized service providers catering to a limited range of services
• Limited bandwidth of MFIs to offer livestock registration/healthcare services to its clients
• Difficulty in uniquely identifying livestock and complications in the process
• Need to build awareness on terms and conditions of the insurance coverage and benefits of livestock insurance
• Need to evolve models based on community involvement or TPA

We have dwelled upon the above points in detail, which you can read by clicking here.

The round table was encouraging for Dairy Network Enterprise (DNE) for the basic reason that the gaps identified during the discussions were primary areas of focus for DNE. The DNE model aroused great interest amongst the representatives of the insurers and MFIs present at the event. The roundtable helped us to ask questions about process related issues in the presence of all the stakeholders and helped DNE get clarity on the specific areas where DNE could contribute significantly.

According to our understanding, DNE would be a significant contributor if it could promote several local and dependable dairy healthcare enterprises on the ground which could work in partnership with MFIs/NGOs and help them deliver risk mitigation solutions (like healthcare and productivity management) and risk transfer solutions (like insurance) to their clients.

Such enterprises on the ground would be powered by the electronic backend that DNE has invested in. The electronic backend that DNE has developed, not only issues over-the-counter cattle insurance but also stores data on the history of every animal recorded on it. Such information would be of great value for insurance companies and would help them in the process of claim settlements and fixing of premium for insurance.

The insurance company can directly collect information on the insured animal instead of asking the farmer to run from pillar to post to collect vaccination certificates from veterinary doctors. The information stored in the database would also help in correct valuation of the animal and empower the dairy farmers to take better decisions at the time of purchase of cattle. After a period of time, each cattle registered on the electronic backend can be given a certificate containing the details of its productivity and healthcare history which would help farmers in deciding the right price at the time of sale or purchase of cattle.

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Avishek Gupta, of Dairy Network Enterprise, IFMR Ventures, contributed this post.

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