The administrative cost for operating the insurance, however, should be minimised and mass awareness should be created to make people interested in such schemes, which should also be commercially viable, they noted.

The views came at the seminar on prospects for a flood insurance market in Bangladesh organised by Poverty Reduction and Environment Management (PREM) Bangladesh and International Network of Alternative Financial Institutions (INAFI) at Spectra Convention Centre in the city.

The speakers said that such a scheme would require farmers to pay a fixed amount of money for the next five years on a regular basis and the farmers would be compensated for any losses caused by floods.

Speaking as the chief guest, PalliKarma Shahayak Foundation (PKSF) Acting Managing Director Mosharraf Hossain Khan said that flood or crop insurance is a very prospective issue for Bangladesh, but it is yet to be developed here.

"Since the knowledge base of the farmers here is weak, it is a matter of concern how you deal with them about the issue," he said, adding that the NGOs working in the rural areas could act as facilitators in this regard. This will also reduce the transaction cost, he observed.

North South University Associate Professor Dr Mizan R Khan said that though flood is a regular phenomenon in Bangladesh, there are not enough structural measures to cope with it and thereby call for unconventional measures like flood insurances.

The micro-finance institutions working at the village level could work as facilitators of the insurance companies, he said and added that strong risk assessment should be made in advance so that the farmers are never cheated.

According to PREM, agriculture is the source of employment for more than 80 percent of the rural population and nearly 35 million people in Bangladesh are affected by flooding every year.

Traditionally, the damage caused by floods are managed by building protective embankments or by providing external help, it says.

"The flood insurance therefore could be an effective means for the farmers," PREM Bangladesh Project Leader Sonia Akter said while presenting a study titled 'Commercial Viability of Catastrophe Insurance in Bangladesh.'

She said that commercial viability of flood insurance in Bangladesh largely depends on the institutional set-up of such insurance scheme. "In a collaborative set-up of NGOs and insurance companies, flood insurance has been found to be reasonably cost-effective in medium and low disaster risk areas."

Environment expert Dr Roy Brouwer of the Netherlands presented a survey on 'Investigating demand for flood insurance in 5 different flood risk areas in Bangladesh', while INAFI Bangladesh Programme Officer Rashed Al Hasan presented on 'Analysis on micro-finance in Bangladesh.'

INAFI Asia and Bangladesh Executive Director Atiqun Nabi also spoke.