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Symposium on making agriculture insurance work

Type of Event:

  Conference
 

Date:

  May 4, 2016
 

Venue:

  Geneva, Switzerland
 

Objective(s):

Organized by the Facility and its partners, the goal of the symposium was to discuss the landscape of agriculture insurance and examine models that can contribute to its sustainable delivery. The aim was also to review existing impact evidence and approaches to deliver agriculture insurance responsibly.

 

Description:

On May 4, 2016, the Facility and its partners organized a public symposium to look into successful models in agriculture insurance, and discussed key issues such as relevance for small-scale farmers and the role of governments to improve equity and sustainability of the schemes. The symposium disseminated some emerging insights from the work of the Global Action Network (GAN) on Agricultural Insurance, a community of thought leaders in agricultural insurance managed by the Facility with the USAID/BASIS/I4; and good practices from the Index Insurance Forum, a community of practitioners in index insurance managed by the Facility with the World Bank Group's Global Index Insurance Facility. 

Agriculture insurance and the Sustainable Development Goals

Craig Churchill opened the symposium by presenting the link between agriculture insurance and the UN Sustainable Development Goals (SDGs). Agriculture insurance can protect farmers from climate-related shocks that trap them into poverty and allow them to make greater investments in production. In this way, it can be a tool to help achieve many SDGs, such as no poverty, no hunger, good jobs, economic growth and climate action. 

Successful models of agriculture insurance

The opening was followed by a session on successful models for agriculture insurance by Pranav Prashad, Panos Varangis and Richard Githaiga. The discussion in the session revolved largely around the role of governments in stimulating the development of agriculture insurance.

Richard Githaiga discussed the Kenya Crops Insurance Program. He explained the rationale behind the program, which was to tackle the cost of post-disaster management for the Government of Kenya and the high losses suffered in the country due to climate events. To overcome these challenges, the Government of Kenya invested in a viable agriculture insurance market through a public-private partnership framework involving insurers, banks, regulatory authorities and agro-dealers. The idea was to create a social protection mechanism to help smallholder farmers manage risks and losses, as well as to increase productivity through improved access to credit and higher-yield technology such as seeds and fertilizers. The main product offered in this programme, which started in February 2016, was an area yield index insurance. Currently, a limited number of farmers are covered in five counties, but the goal is to expand coverage to 28 counties and reach around 27,000 farmers.

Panos Varangis highlighted the importance of public-private partnerships to unlock scale and the fact that insurance needs to be seen as one part of a broader package of services, rather than the main component of a programme.

Pranav Prashad continued the discussion by providing an overview of the range of roles governments can take in supporting agriculture insurance. After discussing the examples of the Livestock Index Indemnity Pool in Mongolia and the National Agriculture Insurance Scheme in India, Pranav highlighted the importance of bundling agriculture insurance with both financial and non-financial services in order to provide greater value to the stakeholders involved, including farmers.   

Creating impact for smallholder farms

The morning ended with presentations from Michal Carter, Michal Matul and Emily Zimmerman on creating impact for smallholder farmers. Michael Carter presented on ex-ante and ex-post impacts of index insurance, using the examples of Index-based Livestock Insurance (IBLI) in Kenya and an index insurance product in Mali and Burkina Faso. In Kenya, results showed that after suffering losses, insured farmers used less negative consumption-smoothing strategies, such as asset sales and cutting consumption. In fact, insured households showed a 36 percentage point decrease in livestock sales and a 25 percentage point decrease in meal reduction. 

Michal Matul discussed the ways to leverage insurance to create comprehensive risk management systems for poor farmers, using the example of tea farmers in Kenya. While tea farmers are not the poorest farmers in the country and have an organized value chain, they are still subjected to a number of risks and expenses, including severe weather events and smaller shocks. By looking at these farmers’ needs, it is possible to build a valuable solution that bundles savings with a portfolio coverage at the factory level, which would allow farmers to cope with both larger and smaller risks. By starting with a simple and tangible solution, it is possible to build trust and create a foundation for providing other valuable insurance products in the future.  

Emily Zimmerman discussed the tool for measuring the value of index products that is being developed by GAN. The existence of some fundamental flaws, such as a bad index, covering the wrong crop or a client protection gap, show that assessing the value of products is very important to guarantee that they are appropriate for farmers.