Livestock insurance remains an underutilised safety net for India’s rural households, despite its potential to protect millions of small and marginal farmers from unexpected losses. Limited awareness, low customisation, and rising climate risks continue to expose rural livelihoods to shocks.

“Awareness and availability of suitable products is a major challenge,” said Sandeep Katiyar, CFO and Co-Founder of Finhaat.

He pointed out that while every livestock owner should ideally have insurance, much of it today is bundled as an attachment product linked to loans.

“To truly protect rural livelihoods, we need more awareness, easier access, and simple, affordable products especially for smallholders and women farmers who are often left out of the system,” he said.

Current cattle insurance products generally cover only the death of animals. But farmers increasingly face losses from diseases and climate-related factors that traditional policies do not address. For example, while lumpy skin disease (LSD) is covered under some state schemes like Bihar’s Pashu Bima Yojana, broader health risks, productivity losses, and heat stress are largely excluded.

“In their current form, most cattle insurance products are not adaptive enough to address rising risks from climate change,” Katiyar said.

Some pilot projects are testing policies linked to weather parameters such as heatwaves, but such innovations remain limited and unavailable to most.

Premiums for livestock insurance vary by region, breed, and the loan factor. Loan-linked policies typically cost less since they’re bundled and negotiated in bulk with livestock loans, while standalone retail policies tend to have slightly higher premiums due to individual risk assessments.

High-yield or crossbred animals also tend to attract higher premiums than indigenous breeds.

Source - CNBC