The fact that Sri Lankan agriculture is highly vulnerable to risk and uncertainty. Sri Lanka frequently suffers from natural disasters, among which water-induced disasters such as floods, droughts and landslides are the most common and destructive types of natural disasters in Sri Lanka.2 Currently, Sri Lankan farmers can insure most of their crops through the conventional crop insurance schemes conducted by government-owned Agricultural and Agrarian Insurance Board (AAIB)Index insurance is a relatively new but innovative approach to insurance provision that pays out benefits on the basis of a predetermined index (e.g. rainfall level)  for loss of assets and investments, primarily working capital, resulting from weather and catastrophic events. Risk is an unavoidable but manageable element in agriculture. Microinsurance has been recognized as one risk management tool in agriculture that secures the socio-economic condition of farmers.

Because index insurance does not necessarily require the traditional services of insurance claims assessors, it allows for the claims settlement processes to be quicker and more objective.

Before the start of the insurance period, a statistical index is developed. The index measures deviations from the normal level of parameters such as rainfall, temperature, earthquake magnitude, wind speed, crop yield, or livestock mortality rates. 

Sanasa Insurance Company Ltd (SICL), a Colombo based insurance company of the SANASA savings and credit societies, which are committed to uplifting the standard of living for low-income Sri Lankan families, particularly in rural areas.

Weather index based Insurance was piloted in apple crop in Jumla district of Nepal. The modality included insurance compensation for apple growers, if precipitation did not occur during 60 days in May-June months

Thanks for the responses. If there are any publications on this please share.