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A step towards better agricultural index insurance

Emerging Insight #:


Date of Release:

  April 12, 2018


  Improving value, Agriculture


  The Facility, AMA Innovation Lab and EA Consultants

Introducing a new tool to assess client value

In a webinar held on March 29, 2018, the ILO, the Feed the Future Innovation Lab for Assets and Market Access (AMA Innovation Lab) at UC Davis and EA Consultants presented a new tool to assess the value of agricultural index insurance products for farmers. The 3-D Client Value Assessment Tool takes a holistic view of value. Beyond pure product features, the 14 indicators consider the broader product value proposition, the context in which the product is offered, and the quality of the processes implemented to deliver the product to smallholder farmers. Each translates an important element of client value into a measurable indicator, for which a product is scored as either poor, average or strong.

The 14 indicators of the 3-D Client Value Assessment Tool

The tool has been tested with five schemes in Peru, Ethiopia, Kenya, Senegal and Zambia. In these pilots, we observed particular variation in the scores given for indicator four. This indicator assesses the maximum benefit amount in relation to farmers’ investment costs. Essentially, it captures whether the benefit received is sufficient to help farmers respond and recover after a risk event occurs.

The scores varied for this indicator as products were designed to cover varying proportions of losses. This was a strategic choice for each insurer and motivated by different factors. For instance, the product in Zambia was intentionally designed to cover smaller proportions of losses (up to 39% of input costs), in order to pay out smaller amounts more frequently, rather than larger amounts rarely. The intention was to build trust in the farming community by giving farmers a “taste” of insurance.

The analysis highlights the need to be clear on what contribution the product aims to make and ensure that it is understood by all stakeholders, especially clients. Index insurance should normally be designed to provide cover for large losses that occur infrequently. However, in new markets, it may be difficult to sell a product that does not pay out for small losses. In these instances, initial products can be used as an anchor to familiarize farmers and build trust, before then offering an option to buy a more comprehensive cover.

To learn more about the tool and how it can be applied to evaluate the value of a new or existing product, listen to the webinar recording and peruse the slides. The tool and supporting documents are available here. For assistance in accessing the material and use of the tool, please contact us at