the story of index based livestock insurance (ibli)
TRANSCRIPT
The Story of Index Based Livestock Insurance (IBLI)
Dr. Rupsha R Banerjee(Post-doctoral Fellow)
Microinsurance Business Models for AfricaParallel Session Agriculture –11 March 2015
Zambezi Sun, Zambia
Drought is a major threat to livestock in the ASALs
Responses to climatic shocks o Migration, Water tracking , migration, selling livestock
Important to protect pastoralists against drought-related livestock losses
IBLI is designed using Normalized Difference Vegetation Index (NDVI)
One of its kind since it promotes market based solutions
The Project
Where we are currently working
Source: Google images and Vrieling ,2014
The Product - What it was and what it is
Was based on statistical relationship between area-average livestock mortality and forage availability o Payouts were received when the
predicted mortality exceeded a particular trigger
Is now designed to protect against prolonged forage scarcity. o Triggers payment to help maintain
their livestock in the face of severe forage scarcity
The Product – What it was and what it is cont..
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Period of NDVI observations forconstructing LRLD mortality index
Predicted LRLD mortality is announced.Indemnity payment is made if IBLI is triggered
LRLD season coverage SRSD season coverage
1 year contract coverage
Sale periodFor LRLD
Sale periodFor SRSD
Predicted SRSD mortality is announced.Indemnity payment is made if IBLI is triggered
Period of NDVI observationsFor constructing SRSDmortality index
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Period of NDVI observations forconstructing LRLD mortality index
Predicted LRLD mortality is announced.Indemnity payment is made if IBLI is triggered
LRLD season coverage SRSD season coverage
1 year contract coverage
Sale periodFor LRLD
Sale periodFor SRSD
Predicted SRSD mortality is announced.Indemnity payment is made if IBLI is triggered
Period of NDVI observationsFor constructing SRSDmortality index
Different payout timings
What have we been trying to do
Make IBLI a sustainable commercially viable product
Create an informed demand
Reach out in areas where markets often shy away from
Provide additional mechanisms by which pastoralists are better prepared against climatic risks
Get the pastoral community out of the ‘freebies’ culture
Data
August /September Sales 2014County Underwriter 1 Underwriter 2
Nos. of clients Premiums No. of clients Premiums Commissions
Marsabit … … 288 242,573 15,403.278Isiolo 60 106,655 104 339,186 20,351.16
Wajir 150 674,235 … … …
Total 210 780,890 392 581,759 35,754.438
Main barriers to development Infrastructure
o Poor basic infrastructure ,low literacy levels, security issues
Understanding and acceptanceo Most pastoralists don’t clearly understand the basic concepts of IBLI
and have liquidity constraints
Lack of visibility o Sporadic appearance during sales period and rapid disappearance
after that
Capacity Developmento Non-recurrance of information, remuneration and coordination
among underwriters and agents
Putting lessons to Practice
Restructuring the current Agency Model o Individual and group models involvement of community
members to become agents o Certificate of Practice for sales agents by the IRA
Embedding services o Partnerships which help in embedding the product as their owno Bundling of services
Putting lessons to Practice contd…
Recurrence of Informationo SMS , talk shows and contact information of agents with
community members, radio campaigns, financial literacy programmes , jingles
Post sales evaluation
Not just education…
Edutainments
Radio programmes
But also getting feedback …
Looking ahead
From asset replacement to asset protection
Simplification of existing training modules through the process of gamification (C:\Users\brupsha\Dropbox\Rupsha's files\Training Method Overhaul\satellite animation 3.gif)
o Rating tool and automation of index announcements o Adoption of a blended learning approach
Using smartphones to revise fundamental concepts of IBLI
Evaluation of new tools and customization as required
Looking ahead contd…
Source: Douthwaite et.al Agricultural Systems 2002
Need for a systematic reflection on experiences from an institutional learning and change (ILAC) perspective
Multistakeholder engagement drawing from innovation platform concepts
What can we all do
Active roles of governments to support strategy, planning and having a legal framework
Thank you for your attention For more info: https://livestockinsurance.wordpress.com/
Questions??