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The feasibility of Picture-Based insurance (PBI): Smartphone pictures for affordable crop insurance

Author

Listed:
  • Ceballos, Francisco
  • Kramer, Berber
  • Robles, Miguel

Abstract

Smallholder farmers are increasingly exposed to weather extremes but lack access to affordable insurance products to protect their livelihoods from catastrophic crop damage. This paper analyzes the feasibility of Picture-Based Insurance (PBI) as a tool to improve the quality and affordability of crop insurance. Under PBI, insurance claims are verified using a time-lapse of pictures from insured plots, both pre- and post-damage, taken by farmers themselves using regular smartphone cameras. PBI aims at minimizing asymmetric information and costs of claims verification compared to indemnity insurance, while reducing basis risk and improving trust, tangibility, and understanding compared to index-based insurance. A pilot implementation in the rice-wheat belt of India speaks to PBI being a feasible and valuable complement to existing insurance products. Damage is visible from smartphone pictures, farmers can take pictures of sufficient quality for loss assessment, and PBI helps reduce severe downside basis risk at minimal cost.

Suggested Citation

  • Ceballos, Francisco & Kramer, Berber & Robles, Miguel, 2018. "The feasibility of Picture-Based insurance (PBI): Smartphone pictures for affordable crop insurance," IFPRI discussion papers 1788, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:ifprid:1788
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    Citations

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    Cited by:

    1. Francesco Cavazza & Francesco Galioto & Meri Raggi & Davide Viaggi, 2020. "Digital Irrigated Agriculture: Towards a Framework for Comprehensive Analysis of Decision Processes under Uncertainty," Future Internet, MDPI, vol. 12(11), pages 1-16, October.
    2. Ayalew, Hailemariam & Chamberlin, Jordan & Newman, Carol, 2022. "Site-specific agronomic information and technology adoption: A field experiment from Ethiopia," Journal of Development Economics, Elsevier, vol. 156(C).
    3. Francisco Ceballos & Samyuktha Kannan & Berber Kramer, 2021. "Crop prices, farm incomes, and food security during the COVID‐19 pandemic in India: Phone‐based producer survey evidence from Haryana State," Agricultural Economics, International Association of Agricultural Economists, vol. 52(3), pages 525-542, May.
    4. Christopher Agyekumhene & Jasper R. de Vries & Annemarie van Paassen & Marc Schut & Phil MacNaghten, 2020. "Making Smallholder Value Chain Partnerships Inclusive: Exploring Digital Farm Monitoring through Farmer Friendly Smartphone Platforms," Sustainability, MDPI, vol. 12(11), pages 1-16, June.
    5. Rosegrant, Mark W. & Fan, Shenggen & Otsuka, Keijiro, 2021. "Global issues in agricultural development," IFPRI book chapters, in: Agricultural development: New perspectives in a changing world, chapter 2, pages 35-78, International Food Policy Research Institute (IFPRI).
    6. De Bandt Olivier, & Jacolin Luc, & Lemaire Thibault., 2021. "Climate Change in Developing Countries: Global Warming Effects,Transmission Channels and Adaptation Policies," Working papers 822, Banque de France.

    More about this item

    Keywords

    INDIA; SOUTH ASIA; ASIA; risk; insurance; technology; finance; smallholders; information and communication technologies (icts); photography; mobile phone; G22 Insurance; Insurance Companies; Actuarial Studies; O13 Economic Development: Agriculture; Natural Resources; Energy; Environment; Other Primary Product; O16 Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance; Q14 Agricultural Finance;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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