Digit Insurance Pays Moisture Index-Based Parametric Insurance Claims to Rajasthan Farmers
The claim has been paid to farmers in over 30 villages in Tonk, as the moisture-based parametric cover based on Water Balance Index (WBI) breached the pre-defined water balance threshold for excess moisture.
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Go Digit General Insurance Limited (Digit Insurance) announced that it has paid one of India’s first moisture index-based parametric insurance claims to farmers in Tonk district of Rajasthan after excess soil moisture breached predefined threshold limits.
Around 500 farmers across 30 villages in Tonk received automatic payouts triggered purely by objective climate data, without field surveys or loss assessments. As climate volatility intensifies, this development marks a shift in how insurance can deliver faster and more transparent financial relief to vulnerable farming communities, moving parametric insurance in India from concept to real-world impact.
The insurance cover was based on the Water Balance Index (WBI), which indicated excessive soil moisture conditions that can lead to waterlogging, crop rot, and reduced yields during the rabi season.
“Digit Insurance partnered with Howden Insurance India to offer a WBI-based parametric solution for excess moisture and drought to over 6,000 farmers across Rajasthan (Tonk) and Uttar Pradesh (Varanasi, Gorakhpur, and Jaunpur), covering close to 2,200 acres of farmland,” the company said in a press release.
With climate-induced risks intensifying, farmers are increasingly exposed to prolonged dry spells, sudden heavy rainfall, and soil moisture imbalances that result in crop failure and financial losses. The moisture index-based parametric insurance aims to provide objective, transparent, and quick payouts, helping farming households better withstand weather uncertainties.
Adarsh Agarwal, Appointed Actuary at Digit Insurance, said, “India is prone to various climate-related risks, and parametric insurance is a unique concept with the potential to safeguard vulnerable segments. Water Balance Index-based parametric insurance is one such solution to provide farmers with quick financial support in times of need.”
Mohammad Faizan Huq, Head of Climate Risk and Agriculture at Howden India, said, “As climate volatility accelerates, India’s agricultural sector deserves tools that deliver speed, transparency, and confidence. Parametric insurance is still evolving in India but has immense potential to transform how insurance is delivered to vulnerable segments.”
Water Balance Index (WBI) is used as a proxy to measure excess moisture or drought conditions in a given location. The index measures the difference between rainfall and potential evapotranspiration levels, and the product is triggered using ERA5-Land climate data from the European Centre for Medium-Range Weather Forecasts (ECMWF). The WBI has been tailored to capture soil moisture stress conditions that directly affect rural smallholder farmers and their families.
The use of parametric insurance means that payouts are triggered by objective and verifiable climate data, ensuring transparent and timely compensation for policyholders.
