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Developing partnerships with governments to offer agriculture insurance

Emerging Insight #:


Date of Release:

  May 29, 2019



The experience of risk pools in Kenya

Six out of ten Kenyans depend on farming, livestock or fishing for a living, and a vast majority are smallholder farmers. These farmers are particularly vulnerable to climate risks. Since 2008, the Kenyan government, the private sector and development partners have collaborated and experimented to develop the agricultural insurance market.

Usually, public-private insurance schemes are promoted by a government through subsidised premiums and by signing up designated population groups. Insurance companies are invited to bid to provide insurance in specific regions of the country. While this has worked in other countries, the Kenyan insurance market was inexperienced in agricultural risks and too fragmented for one insurance company to insure a large group or the entire area. 

The formation of a consortium of insurance companies that pooled the risks was a necessary, yet unprecedented step in 2015. APA Insurance, one of the larger agricultural insurance companies in Kenya, took lead role in the consortium.

Bringing together so many players inevitably came with challenges, such as different expectations and corporate cultures. The consortium established a clear organizational structure for better coordination as well as a management board with CEOs from all members to develop a strategy. The consortium also allowed for insurance companies to take on more responsibilities (such as client sign-up and claims delivery) than would normally happen in a public-private insurance scheme.

The consortium model worked and is a valuable learning opportunity for the insurance companies involved. Since none of the companies had prior microinsurance expertise, they exchanged knowledge and insights through a technical committee, and have since built their capacity together. One proof of this increased capacity is the fact that the consortium has taken on more of the risk, going up from just 10 per cent (the remainder passed to reinsurers) to 20 per cent within three years.

More than 10 years later, Kenya now has a well-developed agricultural and livestock insurance sector and has without doubt set an example for other countries. It has seen a decade of building local capacity and experimenting to align the efforts of public and private partners. The experience of APA and other Kenyan insurers show that a consortium model is worth considering. To find out more about what APA has done to develop the agricultural insurance market of Kenya, read our latest Case Brief.