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New innovations for insuring the poor

Insurance for livestock keepers is being piloted in Marsabit, northern Kenya (ILRI)
Insurance for livestock keepers is being piloted in Marsabit, northern Kenya
ILRI

By insuring poor people, the link between risk and poverty can be broken, a new publication from the International Food Policy Research Institute (IFPRI) claims. From index-based livestock insurance in Mongolia to weather-based insurance in India and Malawi, Innovations in insuring the poor, considers interventions that increase the tools available to smallscale farmers which help them deal with droughts, floods and disease when they occur. In addition to documenting the lessons learned, the report also highlights the challenges that need to be overcome.

Index-based livestock insurance, that uses satellite images of vegetation to determine when claims should be paid out, is one new innovation that is being piloted in Marsabit, northern Kenya. "The reason this system can work is that getting compensation does not require verifying that an animal is actually dead," explains Andrew Mude, the project leader at the International Livestock Research Institute (ILRI). "Payments kick in when the satellite images show us that forage has become so scarce that animals are likely to perish."

Livestock keepers in Marsabit will pay premiums of between 3.25 per cent and 5.5 per cent of the value of their animals, depending on how drought-prone the area is. This will amount to about US$5 per cow and US$0.5 cents for a goat or sheep. "Insurance is something of the Holy Grail for those of us who work with African livestock, particularly for pastoralists who could use insurance both as a hedge against drought - a threat that will become more common in some regions as the climate changes - and to increase their earning potential," says Carlos Seré, ILRI director general.

Date published: March 2010

 

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