Evaluating the efficacy of an app-based livestock insurance scheme in Gujarat, India

3ie evidence programme:  Agricultural Insurance Evidence Programme
Author(s): Suraj Nair, Ajaykumar Tannirkulam, Divya Mary
Institutional affiliation(s): Institute for Financial Management and Research- Leveraging Evidence for Access and Development (IFMR LEAD)
Grant-holding institution: IFMR LEAD
Main implementing agency: IFMR LEAD
Sex disaggregation: Yes
Gender analysis: No
Equity focus: Yes
Study type: Formative evaluation

Context

The selected study location for this evaluation is Mahisagar district in north-central Gujarat. The district was chosen due to its high livestock density, availability of pastureland for grazing and low penetration of non-loan-linked livestock insurance.  Overall, the district ranks low on socio-economic indicators such as literacy, and has a high number of residents who fall into the scheduled tribe category. The predominant economic activities revolve around agriculture (paddy, maize) and animal husbandry (mainly dairy). The district has around 70 per cent landholdings owned by small and marginal farmers, the average size of holding is two hectares (NABARD, PLP 2016–17). In the recent past, the district has suffered from erratic monsoons, long dry spells in rainy seasons. The study population broadly comprises low-income cattle owning households.

Intervention design

The intervention was an app-based platform that digitises the livestock (cattle) insurance in-field enrolment process and claims process. The app reduces turnaround time, cost and enhances scalability by reducing the time taken by claims process from 15-20 days, to just two to three days. This insurance scheme was complemented with a mandli-level (community-level cooperative societies focused on aggregating milk) engagement and door-to-door marketing

Evaluation design and methodology

Selected villages were randomly assigned to three treatment arms:

T1. App-based livestock insurance scheme with lower premium rates;
T2. App-based livestock insurance scheme with standard premium rates;
C. Manual enrollment and claims verification.

Mandli-level and marketing strategies were implemented across all three arms, but varied across famers in order to understand the importance given to product features while considering take-up. Five villages randomly assigned to T1 received additional marketing information outlining details about the app-based scheme and related benefits. The remaining 5 villages in T1 received regular details about the insurance policy.

Additionally, 8–10 farmers were also purposively selected for focus group discussions to ensure inclusion of as many small farmers as possible Inclusion criteria included having at least four adult cattle and incomes under four lakhs.

Primary evaluation questions

1. What are the requirements (operational/ infrastructural) that need to be in place to ensure successful roll out of a mobile-app based insurance product?
2. Compared to the traditional offline method, what savings in operational costs, and time (for client and provider) would a mobile-app based insurance system provide?
3. What sort of reductions in premium could be expected by leveraging savings from operational costs?
4. Would the promise of a fool-proof insurance policy system that is capable of fast and fair claim settlement lead to an uptake in livestock insurance (with adequate marketing and knowledge dissemination?

Primary findings

1. A large majority of the farmer’s report hearing about the intervention through the mandli secretary/ mandli networks highlighting the importance of these networks in improving insurance take-up.
2. Overall around 94 per cent of those households surveyed across the three groups found that the marketing provided to them in the last one to two months have been useful.
3. The study found no gaps in terms of infrastructure, for the implementation of the app-based insurance process. Network connectivity was good at all points of observation.

Implications

1. Digitisation makes it possible to underwrite a cheaper premium rate by smoothening out process inefficiencies.
2. Targeted outreach strategies are capable of improving insurance take-up.