The Government of Indonesia has embarked on the task to provide crop insurance to all farmers of the country, while initially focusing on smallholder farmers growing rice. After several years of preparation, the insurance program was launched in October 2015, targeting to insure 1 million hectares of land under rice in 16 provinces by the end 2015.
The numbers of farmers to be insured are staggering: some 3 million in phase 1, and ultimately some 27 million farmers. The G4INDO (Geo-data for Indonesia) project develops technology that makes it possible to efficiently process large numbers of clients (farmers taking an insurance) and claims (from farmers experiencing crop loss). In addition the project advices the Government of Indonesia, and the insurance company responsible for the actual implementation of the insurance program, on issues as distribution and marketing of the insurance products, their design, and assessment of impact on farmers’ income. In short, the project will provide the following services:
- advice on the design of a digitalised client database
- provide technical assistance to the design and implementation of an IT platform
- advice on methods and best practices to promote and distribute crop insurance to smallholder farmers
- provide technical assistance to the design of crop insurance products and re-insurance modalities
- assess the impact of the introduction of insurance to small farmers
G4INDO is financed by the Government of the Netherlands under the G4AW facility. The project started September 2014 and runs till September 2017. By that time a financially sustainable service should be ready. The project is implemented by a consortium of 8 partners, of which 2 are private sector companies. All technology is developed with and within the offices of Indonesian partner organisations.
At the core of the project is the development of an IT platform. Given the large numbers of farmers that will have an insurance contract, it can also be expected that many claims for compensation will reach the insurance company each season. These have to be processed, within a limited number of days. The IT platform is designed to make claim processing more efficient. It is a software tool that integrates satellite data (radar and optical images) with crop growth data and models, hydrological models, and weather and seasonal data. The resolution at which conclusions can be drawn is at the level of individual fields. Claim processors from the insurance company will use the tool.
The IT platform has a number of advantages:
- capable of processing large numbers of claims
- swift responses to claims possible
- system can be connected to cell phones of users and decisions regarding claims can be sent using text message
- over time the system becomes more efficient, with less false positive and false negative results
- the IT system can suggest whether a claim should be honoured, rejected, or further assessed, based on a set of rules (protocol); the claim processer can accept or override the suggestion
- less costly compared to relying on claim adjusters; most cost effective combination of claim processing using IT platform and claim adjusters paying field visits to be established in practice
By the end the 2017 the system should have proven itself and should be continued by the Indonesian partners (this is meant with financially sustainable). Chances that this will happen are promising. Already at this moment during project implementation (year 1) the insurance company prepares itself to integrate the IT platform in its day to day operations.