Digital Insurance | What are the New Findings of the "Quantitative + Qualitative" Research?

Recently, the Chinese Academy of Financial Inclusion (CAFI) has completed the draft of Weather Index Insurance (WII) Research Report (hereinafter referred to as the Report). The Report is based on desk research, expert opinions, and six-month effort to conduct a questionnaire survey of 1,156 rural households in provinces including Gansu, Hebei, Guangdong, Sichuan, Shandong and Jiangxi. In addition, the team carried out more than 20 group interviews with relevant government departments, insurers, and farmers. The aim is to identify, thorough quantitative and qualitative research, the role of WII in promoting the development of agriculture and rural areas, improving financial inclusion ecology, and contributing to rural revitalization.

Based on China's policy environment, The Report focuses on the status quo, challenges, and opportunities of supply and demand sides of WII and analyzes the effective path for its future development.


As a country frequently hit by meteorological disasters, since 2007, China has been exploring agricultural WII in theory and practice and has been working with multiple parties, including the National Climate Center (NCC), the Ministry of Agriculture and Rural Affairs (MARA), domestic insurers, the International Fund for Agricultural Development (IFAD), and the United Nations World Food Programme (WFP). However, as an agricultural insurance product, WII is still facing multiple challenges in China.


Specifically, from the supply side, the coverage of China's agricultural insurance is expanding, but more should be done to ensure it is delivered on the ground. The insurance is mainly policy-backed, and the involvement of commercial insurers is rather limited. Current challenges include lack of fiscal support in some regions to fund the policy insurance; little interest on the part of insurers; insufficient input in enhancing the community service capacity. For the demand side, farmers are financially illiterate and have little knowledge about agricultural insurance—especially new types of insurance such as WII. As a result, their demand for agricultural insurance is not fully revealed and farming and animal husbandry risks are not fully covered.


The Report points out that the government should further enhance digital enablement, improve financial literacy of farmers and community service agencies. Moreover, the government should explore new product models, and strengthen support and promotion of innovative index insurance. All these approaches can effectively enhance China's agricultural insurance. Given the huge differences in agricultural production and economic development across China, This Report takes Gansu and Guangdong, two pilot provinces as examples. The Report analyzes in detail the sustainable development path of agricultural insurance and WII in the two provinces according to local agricultural conditions, providing a case study for WII to be disseminated in other provinces or nationwide.


The draft of this Report will be submitted to industry experts for review, and the CAFI team will further improve and complete the final version based on their comments and suggestions.


The Weather Index Insurance Report is based on The China Weather Index Insurance Project (China WII), launched by the International Finance Corporation (IFC) of the World Bank Group in China in 2019 with the support of the British Embassy Beijing.


The Report responds to the related requirements of the Ministry of Finance and the Ministry of Agriculture and Rural Affairs to promote agricultural WII, helps reduce farmers’ risk of falling into to or returning to poverty because of meteorological disasters, and explores the total solution of "digital technology + meteorological data + smart agriculture" as well as potential development paths for the national rural revitalization.