Performance Evaluation of Weather Index Based
Insurance Scheme in China

ZHU Junsheng, TU Guozhu

Capital University of Economics and Business

Abstract:
This paper is expected to substantially contribute to the overall improved understanding of the effectiveness, appropriateness and efficiency of drought and flood related weather index based insurance schemes in the context of rural China. It will evaluate the potential of a scale up of weather index based insurance products and its sustainability and contribute to the determination of the way forward of weather index based insurance products in China. It evaluates the accomplishments and challenges of the weather index insurance pilot in both technical and operational sides. In technical side, it evaluates the correctness to identify the risk, the availability of weather stations to measure Index, the properness of the approach to establish probabilities, the appropriateness of the price and the adequacy of studies to understand the impacts. In operational side, it evaluates the intensity of demand for index insurance, appropriateness of skills, effectiveness of delivery channels, willingness of the risk taker, trust of farmers for the insurance, adaptation of exiting legal and regulatory frameworks and necessity of subsidies. Four types of tools are deployed to extract and record relevant information for the evaluation, including Focus Group Discussions, Household Level Interviews, Stakeholders Interview and Household Survey. In summary, the pilot of index insurance in China has accumulated rich experiences and also posed a lot of challenges. The main lessons learned and recommendations includes improving the availability, accessibility, quality and quantity of data, enhancing support of government, seeking existing networks as platforms for index insurance, raising awareness and promote marketing, developing a strong legal and regulatory system, exploring index insurance for disaster management of governments and fostering mechanisms for participation, coordination and balance.

Key words: Evaluation; Weather Index Based Insurance Scheme; China; Technical side; Operational side.