Harnessing Insurance for Climate Resilience in Indian Agriculture

India is home to approximately 150 million farmers, of whom 86 per cent are smallholders or marginal farmers. These farmers are disproportionately vulnerable to the impacts of climate change, which undermine agricultural productivity and threaten income and food security. While crop insurance and sustainable agricultural practices can provide an effective solution, crop insurance penetration remains low. Only around 25 per cent of farmers are insured, leaving the vast majority without any form of protection in the event of climate shocks. This project is designed to improve the climate resilience of underserved farmers through a risk-transfer solution. GCF’s financing of USD 20 million will be leveraged to mobilise additional capital, building the solvency capital of Kshema General Insurance Limited, a licensed general insurance company that provides agricultural crop insurance for rural small and marginal farmers in India. This will augment its capacity to underwrite more crop insurance and expand support to farmers. In addition, Kshema’s digital technology will be leveraged to provide early warning signals and weather information to farmers, as well as training on sustainable agricultural practices. GCF financing, together with other investors, are expected to further unlock the potential of the crop insurance market in India by addressing financial and non-financial barriers.