For eight years, Chandrasiri Vanasunder, a small holderfamerin the Ratnapura district of Sri Lanka, bore the lossescaused by drought and excess-rainfall on his 2-acre teaestate. But all that begun tochange in 2012, when a salesrepresentative from Sanasa told him about ‘index-basedinsurance’ for tea plants. “As soon as I heard about theproduct, I knew that this was a good product. I have sufferedsevere losses in the past, and this seemed like a smart ideato help me prepare for future uncertainty.” Vanasunder’sjudgment proved right, as approximately half -way throughthe last season, he received

This Masters thesis presents the results of a pilot scale study on weather index-based rice insurance in Zhejiang province, China. The goal of this thesis is to find the best suited weather index-based rice insurance model for each rice cropping zone of Zhejiang. By testing a wide range of weather indexes for their relationship with the rice yield per unit land in each rice cropping zone using classic regression models, a set of weather indexes were selected for each rice cropping zone of Zhejiang. A rice insurance product was then designed based on the relationship between the chosen weather index and rice yield. Basis risks were studied in detail in this thesis, and were reduced in the insurance model by defining the insurable farming scale to rice cropping zone and by removing the time trend in rice yields. The results show diversified features in weather index and insurance product design of different rice cropping zones in Zhejiang.