The Feasibility of Picture-Based Insurance (PBI): Smartphone Pictures for Affordable Crop Insurance

IFPRI Discussion Paper 1788

40 Pages Posted: 4 Feb 2019

See all articles by Francisco Ceballos

Francisco Ceballos

International Food Policy Research Institute (IFPRI)

Berber Kramer

International Food Policy Research Institute (IFPRI)

Luis Miguel Robles

World Bank Group; International Food Policy Research Institute (IFPRI)

Date Written: December 27, 2018

Abstract

Smallholder farmers are increasingly exposed to weather extremes but lack access to affordable insurance products to protect their livelihoods from catastrophic crop damage. This paper analyzes the feasibility of Picture-Based Insurance (PBI) as a tool to improve the quality and affordability of crop insurance. Under PBI, insurance claims are verified using a time-lapse of pictures from insured plots, both pre- and post-damage, taken by farmers themselves using regular smartphone cameras. PBI aims at minimizing asymmetric information and costs of claims verification compared to indemnity insurance, while reducing basis risk and improving trust, tangibility, and understanding compared to index-based insurance. A pilot implementation in the rice-wheat belt of India speaks to PBI being a feasible and valuable complement to existing insurance products. Damage is visible from smartphone pictures, farmers can take pictures of sufficient quality for loss assessment, and PBI helps reduce severe downside basis risk at minimal cost.

Keywords: India, South Asia, Asia, Risk, Insurance, Technology, Finance, Smallholders, Information and Communication Technologies (ICTS), Photography, Mobile Phone

JEL Classification: G22, O13, O16, Q14

Suggested Citation

Ceballos, Francisco and Kramer, Berber and Robles, Luis Miguel, The Feasibility of Picture-Based Insurance (PBI): Smartphone Pictures for Affordable Crop Insurance (December 27, 2018). IFPRI Discussion Paper 1788. Available at SSRN: https://ssrn.com/abstract=3324536

Francisco Ceballos (Contact Author)

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Berber Kramer

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Luis Miguel Robles

World Bank Group ( email )

1818 H Street NW
Washington, DC 20433
United States

International Food Policy Research Institute (IFPRI) ( email )

1201 Eye St, NW,
Washington, DC 20005
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
13
Abstract Views
91
PlumX Metrics