Claims have been paid to farmers in more than 30 villages of Tonk, as the moisture-based parametric cover based on Water Balance Index (WBI) has violated the pre-determined water balance threshold for excess moisture.
Go Digit General Insurance Limited (points insurance) announced that it has paid one of India’s first Moisture Index-Based Parametric Insurance Claims have been made against farmers in Rajasthan’s Tonk district after excess soil moisture exceeded predefined threshold limits.
About 500 farmers from 30 villages in Tonk received automatic payments based entirely on objective climate data, without field surveys or damage assessments. As climate volatility increases, this development marks a shift in how insurance can provide faster and more transparent financial relief to vulnerable farming communities, taking parametric insurance in India from concept to real-world impact.
Insurance cover was based on Water Balance Index (WBI)Which indicates excessive soil moisture conditions which may lead to waterlogging, crop rot and low yields during Rabi season.
“Digit Insurance has partnered with Howden Insurance India to offer WBI-based parametric solutions for excess moisture and drought to over 6,000 farmers covering approximately 2,200 acres of agricultural land in Rajasthan (Tonk) and Uttar Pradesh (Varanasi, Gorakhpur and Jaunpur),” the company said in a press release.
With climate-induced risks intensifying, farmers are facing prolonged drought, sudden heavy rainfall and soil moisture imbalances, resulting in crop failures and financial losses. Moisture index-based parametric insurance aims to provide objective, transparent and prompt payouts, helping farmer households better cope with weather vagaries.
Adarsh Agarwal, “India is prone to various climate-related risks, and parametric insurance is a unique concept with the potential to protect vulnerable sections. Water balance index-based parametric insurance is one such solution to provide quick financial support to farmers in times of need,” said Actuary, appointed at Digit Insurance.
Mohammad Faizan Haq, Head of Climate Risk and Agriculture, Howden India, said, “As climate volatility increases, India’s agriculture sector deserves tools that provide speed, transparency and confidence. Parametric insurance in India is still evolving, but it has immense potential to transform the way insurance is delivered to vulnerable groups.”
Water Balance Index (WBI) Used as a proxy to measure excess moisture or drought conditions at a given location. The index measures the difference between precipitation and potential evaporation levels, and the product is triggered using ERA5-land climate data from the European Center for Medium-Range Weather Forecasts (ECMWF). The WBI is designed to capture soil moisture stress conditions that directly affect rural smallholder farmers and their families.
The use of parametric insurance means that payouts are triggered by objective and verifiable climate data, ensuring transparent and timely compensation for policyholders.
