Software and Algorithm for Cost-Effective and Fair Rain Index Insurance for Farmers

Technology #16432

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Chitsomanus P Muneepeerakul
Rachata Muneepeerakul
Managed By
John Byatt
Assistant Director 352-392-8929

Uses Rainfall Intensity and Frequency Data to Accurately Determine Crop Damages

This software and algorithm use both rainfall intensity and frequency data as the basis for rain index insurance, offering better protection and less cost for farmers and insurers. Available weather index insurance should provide financial protection to farmers struck by unfavorable weather, but has a low level of adoption due to “basis risk.” Basis risk relates to the likelihood that an insurance payoff falls short of the actual losses a farmer experiences. This can occur when the selected weather derivatives and their thresholds don’t correspond to actual damages or when the weather conditions between the meteorological stations and the insured farms don’t match. The majority of available index insurance contracts rely on cumulative rainfall, yet cumulative rainfall and yield don’t correlate very reliably. Researchers at the University of Florida have developed software and algorithms that incorporate both rainfall intensity and frequency into a statistical model to assess crop yield damage. This information, gathered using the same gauges used for existing cumulative rainfall index insurance products, provides the basis for rain index insurance that offers better, lower-cost protection for farmers by allowing insurance companies to more reliably estimate appropriate insurance premiums.


Software and algorithm to be used by insurance companies that use both rainfall intensity and frequency data to better estimate crop yields and thus any payments to insured farmers.


  • Uses rainfall intensity and frequency data, reducing basis risk in rain index insurance, thus allowing insurers to better estimate insurance premiums while reducing the risk to farmers that insurance payoff falls short of actual losses
  • Monitors selected indexes that more closely reflect yield, eliminating need for insurers to verify actual damages
  • Uses existing rain gauges and simple data collection, adding no additional cost for farmers and insurers


Researchers at the University of Florida have completed global sensitivity analysis on indexes affecting crop yields and determined that climatic inputs, namely rainfall intensity, frequency, and potential evapotranspiration are the top three influencers. Rainfall fluctuation, more so than rainfall accumulation, dominantly defines crop yield. By incorporating rainfall frequency and intensity data into software and algorithms to analyze crop yields, this technology creates a more reliable method for assessing crop damage. It is possible to offer better protection at a lower premium, promoting and sustaining the insurance campaign by incorporating rain intensity and frequency data into the design of index insurance and without additional data collection cost.

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