To address the issues associated with traditional indemnity insurance, efforts have been made to develop weather-index insurance in Asia that bases the payouts on the rainfall or temperature index, rather than on the direct damage measurements. The parametric insurance products help avoid the delays in insurance payouts as they are based on modelled risks, rather than actual damage measurements, and control the adverse selection and moral hazard, although basis risks could be increased due to improper matching of payouts with the index . Index insurance is known to promote public-private partnerships that in turn will enhance the efficiency of overall programme delivery . Several countries, including India, Bangladesh, Thailand, Indonesia, Myanmar and the Philippines, either are currently piloting or expanding the weather-index insurance . Index insurance is constantly expanding with an estimated 194 million farmers already enrolled in China and India, which is much lower than the potential number of farmers it can reach .
IPCC
Climate Change 2022: Impacts, Adaptation and Vulnerability
IPCC Report