Commencement of the Development of Weather Index Insurance Services
The Remote Sensing Technology Center of Japan (RESTEC), jointly with the Sompo Japan Nipponkoa Group, has commenced the development of “Weather Index Insurance” Southeast Asian. In Southeast Asia, where the development of social infrastructure has not caught up with the rapid pace of economic development, economic losses arising from large-scale natural disasters are on the rise, while non-life insurance services based on actual loss assessment, like those pervasive in industrial nations, have yet to become common. The Weather Index Insurance pays out contractual insurance benefits to policyholders when weather indicators that have major impacts on agriculture and other economic activities, such as an precipitation volume and temperature, deviate significantly from average normal levels (drought, heavy rains and low temperature), with the absence of loss assessment for individual policyholders keeping the insurance service’s running cost low. This particular insurance product is also said to have a low risk of moral hazards like “micro insurance” designed specifically to keep insurance premiums low, where insurance coverage provides benefits larger than actual business operations, thereby inviting unintended stagnation of economic activities. In operating the Weather Index Insurance, it is important to be able to utilize objective weather indicators in a stable manner. Therefore, by making use of the Global Satellite Mapping of Precipitation (GSMaP) developed and operated by the Japan Aerospace Exploration Agency (JAXA), and others, RESTEC will develop and provide an information service on data on the amount of rainfall for companies that design and operate the Weather Index Insurance.