Kshema, the Indian agricultural insurer that leverages technology and parametric triggers to provide cover to smallholder farmers, is set to receive $20 million in funding from the UN Green Climate Fund (GFC) to help it scale up its offerings.
“This will augment its capacity to underwrite more crop insurance and expand support to farmers. In addition, Kshema’s digital technology will be leveraged to provide early warning signals and weather information to farmers, as well as training on sustainable agricultural practices,” GFC added.
According to the fund, India is home to approximately 150 million farmers, of whom 86% are smallholders or marginal farmers.
These farmers are said to be disproportionately vulnerable to the impacts of climate change, which undermine agricultural productivity and threaten income and food security
“While crop insurance and sustainable agricultural practices can provide an effective solution, crop insurance penetration remains low,” GCF said.
Natraj Nukala, Founder, Kshema General Insurance Limited, commented, “We are grateful to the board of GCF for seeing the value of our proposal in the context of adaptation to climate change.
“I also thank the Ministry of Environment, Forests and Climate Change and the empowered committee members representing other relevant authorities, along with the National Bank for Agriculture and Rural Development, for their continuous guidance and support.”
Kavita Sinha, Director of the Green Climate Fund’s Department of the Private Sector Facility, said, “‘Harnessing Insurance for Climate Resilience in Indian Agriculture’ is a landmark for GCF – it is GCF’s first investment to support an innovative microinsurance solution enabling provision of crop insurance against climate vulnerability for smallholder and marginal farmers.
“This comprehensive solution includes early warning and capacity building of vulnerable farmers for sustainable agriculture practices. By partnering with national institutions to deploy innovative insurance solutions, GCF is helping protect rural livelihoods from climate shocks while promoting more sustainable and resilient agricultural systems.”
This development aligns with remarks made last year by Nukala in an interview with Reinsurance News.
Nukala emphasised that the firm is not intimidated by potential new entrants to the Indian market, particularly in light of recent regulatory easing by the Insurance Regulatory and Development Authority of India (IRDAI).
In March 2024, the IRDAI approved eight principle-based consolidated regulations aimed at driving greater efficiency and effectiveness across India’s insurance sector, advancing the long-term vision of “Insurance for All” by 2047.
This regulatory milestone is expected to facilitate the entry of more insurers and reinsurers, helping to address the protection gap that persists within the country’s insurance landscape.
Nukala noted that the arrival of these new players could help bridge the divide between the insured and uninsured, a goal Kshema has pursued since its inception, while complementing the company’s mission to expand access to crop insurance for smallholder farmers.
About the Author
