Expansion of sales area to five provinces increases number of insurance policies sold to 6,173
We hereby announce that Sompo Japan Insurance (Thailand) Co., Ltd. sold 6,173 Weather Index Insurances for farmers in five provinces in northeast Thailand, largely exceeding the 1,158 insurances sold in the previous fiscal year.
Weather Index Insurance is a financial product developed by the Sompo Japan Group in cooperation with the Japan Bank for International Cooperation (JBIC) for the purpose of coping with drought damages caused to rice farmers. The product was developed as part of a pilot project to confirm the effectiveness of the insurance’s functionality as an adaptation measure for climate change effects, for which global expectations are high. In 2010, the product was sold in Khon Kaen province in northeast Thailand. In the project’s second year of 2011, the product’s sales area was expanded to five provinces in northeast Thailand.
This year, Sompo Japan Thailand, through the Bank for Agriculture and Agricultural Cooperatives of Thailand (BAAC), solicited applications for approximately four months from February 17 to the end of May 2011. The product’s easy to understand setup in which insurance payments are based on the observed result of accumulated precipitation was highly praised by Thai farmers, leading to the sale of 6,173 which largely exceeds the number of applications in the previous year.
Please see the following website for the news issued at the time of the sales area expansion of Weather Index Insurance
1. Factors Behind the Sales Expansion
(1)Expansion of sales area to five provinces
Based on the 2010 sales results, the sales area was expanded to four provinces in northeast Thailand in response to a request from BAAC: Nakhon Ratchasima province; Mahasarakham province; Kalasin province; and Roi Et province. Including Khon Kaen province from the previous year, the insurance was sold in a total of five provinces.
(2) Realization of an easy to understand and simple product
In order to promote an accurate understanding of the insurance product among farmers in northeast Thailand who were unfamiliar with the concept of “insurance,” a particular emphasis was placed on “simplicity” in developing the Weather Index Insurance. As a result, we have developed an easy to understand and simple product, which pays out a contractually predetermined insurance payout should the accumulated precipitation fall below a determined value.
(3) Partnership with the Bank for Agriculture and Agricultural Cooperatives of Thailand (BAAC)
Providing product guidance through BAAC, an organization which has strong presence in the agricultural areas of Thailand, has offered a sense of reassurance to customers. Prior to selling the insurance, we also held numerous meetings with BAAC, which has direct contact with farmers, and strove to develop an easy to use application tool.
2. Way Forward
To begin full-fledged sales of the insurance beyond FY2012, we will consider revising the product content and application tool, expanding the product’s availability to other provinces in Thailand, diversifying the type of crops for which the insurance is available, and marketing the insurance in other countries in the Southeast Asian region.
Originally released: July 19, 2011