Literature Review on “"Weather Index Insurance for Agriculture in Bangladesh: Significance of Implementation and Some Challenges”"

This paper provides an overview of Bangladesh and its profile in relation to climate changes, agriculture, and insurance. It examines the concept of weather index insurance, its role in agriculture, and its advantages and challenges.The paper states that agriculture in Bangladesh is its primary source of food, employment opportunities, and poverty reduction. The country's agricultural production is mostly affected by natural disaster and extreme weather such as flood, drought, cyclone, and salinity intrusion which are directly related to the climate change. In these instances, weather index insurance, which is a predetermined threshold insurance, can benefit farmers by providing them with an indemnity payment in the event of a flood, drought, cyclone, hail, etc. The advantages of weather index insurance to agriculture as presented in the paper include:

• Compared to traditional insurance, a weather index insurance helps the entire sales mechanisms as it pays based on the realized value of the related index;
• Insurer has a high knowledge on the best information which reduces the problem of adverse selection;
• Insurance companies can increase the usage of weather index insurance in a sustainable manner. They can do so by acting as a bridge between farmers and market, infrastructure, and information, and by providing value-add services such as financial inclusion.