unep-psi webinar series "making inclusive insurance work" - session 5: agriculture and...

Making inclusive insurance work:

Agriculture and climate risks

The UNEP-PSI and ILO webinar series

2

Making inclusive insurance work - A webinar series by the International Labour Organization’s Impact Insurance Facility and UN Environment’s

Principles for Sustainable Insurance (PSI) Initiative

As part of the global agenda of insuring for sustainable development, the Impact Insurance Facility (www.impactinsurance.org) and the PSI Initiative (www.unepfi.org/psi) are organizing a seven-part webinar series with the

theme, “Making inclusive insurance work”.

Today’s session will focus on agriculture and climate risks

Interfacing with the webinar system

3

Tell us what you think. Type your questions/ commentshere even while the presentation is going on. These will only be visible to the staff.

Polls will also be opened during the webinar – participate by clicking on your answers

Hide/unhide the control panel



4

Presenter:Manoj Yadav

Project AdvisorGIZ

Facilitator:Miguel Solana

Senior Technical Officer,Impact Insurance Facility

4

Presenter:Marcel Stäheli

Senior Parametric Product Manager

CelsiusPro

Presenter:Samson Ajibola

Head, Agricultural and Micro Insurance

Leadway

“Failure of climate-change mitigation and adaptation” as thegreatest risk facing the world over the next 10 years

According to the WEF 2016 Global Risks Report

5

Imp

act

Likelihood

Agricultural and climate risks in the

context of the SDGs

6

What is the biggest challenge for the insuranceindustry to develop solutions for agriculturaland climate risks

1. Data availability and changing patterns of events

2. Understanding of insurance integrated to otheradaptation strategies

3. Delivery mechanisms to reach out to thepopulation

Audience poll 1

7

RISKS ASSOCIATED WITH

AGRIBUSINESS AND

INVESTMENTS

Samson Ajibola, Head, Agricultural and Micro InsuranceLeadway

RISKS ASSOCIATED WITH AGRIBUSINESS AND INVESTMENTS

Production Risks:

• Agricultural Production implies expected outcome or yield from cultivated crops or animals reared.

• Any production related activity or event that has a range of possible outcomes is a production risk

• Sources of production risks includes: weather, climate change, pests, diseases, technology, genetics, machinery efficiency, quality of inputs, fire, windstorm, lightning, theft, encroachment

.

http://www.google.com.ng/url?sa=i&source=images&cd=&cad=rja&docid=b_9V7Qi4CGU7zM&tbnid=aBXoXMzPKsxnSM:&ved=0CAgQjRwwAA&url=http://www.thetruthaboutforensicscience.com/why-dont-we-six-sigma-forensic-science-its-all-about-method-validation-traceability-and-quality-assurance/&ei=rU51Ub__L4LP0QX3qoHABA&psig=AFQjCNFdVk_9lNyPhZERvvfGEoBJORRB-g&ust=1366728749831802



Financial Risks:

4 Basic Components of Financial Risks:

The cost and availability of capital;

The ability to meet cash flow needs in a timelymanner;

The ability to maintain and grow equity;

The ability to absorb short-term financialshocks.

Cash flow is especially important because of thevariety of on-going obligations such as inputscosts, cash lease payments, tax payments, debtrepayment, family expenses, and staff salary

.




Marketing Risk:

Marketing is transforming productionactivities into financial success.

Agriculture operates directly or indirectly ina global market. Unanticipated forcesanywhere in the world, such as weather orgovernment action, can lead to dramaticchanges in output and input prices.

Demand versus Supply = Price

Marketing risk is any market related activityor event that leads to the variability ofprices farmers receive for their products orpay for production inputs or services.

Access to markets is also a marketing risk.

.




Human Risks: People are both a source of business risk and an

important part of the strategy for dealing withrisk.

At its core, human risk management is theability to keep all people who are involved inthe business safe, satisfied and productive.

Human risk can be summarized into four maincategories:

Human Health and Well Being; Family and Business Relationship; Employee Management; Transition Planning.

.



RISK ASSOCIATED WITH AGRIBUSINESS AND INVESTMENTS

Legal RisksThe legal issue most commonly associated withagriculture fall into 5 broad categories:Contractual Arrangements;Business Organization;Laws and Regulations;Tort Liability;Public Policies and Attitudes.

.



NAIS was established in 1987 to mitigate risks faced by farmers and thereby promote the growth ofagricultural sector.

NAIC was established by NAIC Act of 1993 as the only underwriter of Agricultural Risks

Up to 2012, the scheme covers only 500,000 farmers which is far from achieving it set goals

To expand Agricultural Sector there is need for involvement of private commercial insurance companies who:

1. Can do business as business on contractual and commercial basis that would give confidence and guaranteeto the institutional lenders to agribusiness value chains

2. Will consider the small, middle and large scale farmers and their families

3. Have capacity to bear the risks and pay claims promptly without any bureaucracy

4. Provide insurance that transcend from farm to the family health and wealth

5. Have adequate risk management mechanisms and professional advisory services.

The Leadway Agricultural Insurance was carefully developed to address these needs.

AGRICULTURAL INSURANCE IN NIGERIA – An Overview

.

Kenya Livestock Insurance

Program

16

Marcel Stäheli, Senior Parametric Product ManagerCelsiusPro

CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]

Video presentation

17

Go to www.youtube.com/watch?v=q4asbUmd8w0

to watch the three-minute video

http://www.youtube.com/watch?v=q4asbUmd8w0


Kenya Livestock Insurance Program (KLIP)

18

National Agricultural Insurance Scheme – Kenya

• The Ministry of Agriculture Livestock & Fisheries in Kenya plans to use insurance to cushion Kenya’s livestock keeping communities against drought related loss of livestock;

• KLIP has been developed with support from World Bank, ILRI1), and public and private sector stakeholders;

• It is a macro-level insurance scheme for asset protection;

• Forage availability as determined by satellite data will trigger payout;

• National government intends to provide (as a start) 100% premium support for 5 tropical livestock units (TLU) belonging to vulnerable pastoralists;

• The insurer and beneficiaries will make arrangements for top up and voluntary cover via IBLI2) program;

• The insuring company will make payouts directly to the accounts/mobile payment systems of the beneficiaries when there is a trigger

1)International Livestock Research Insitute2)Index Based Livestock Insurance

CelsiusPro has set-up a web-based tool to extract and access NDVI data

Login Page to CelsiuPro’s web-based tool


Kenya and Agriculture

19

Huge Livestock Wealth

14 target ASAL pastoral counties have

9.140 M cattle= 52.3%

13.462M sheep= 78.6%

21.024M goats= 75.8%

2.962M camels= 99.7%

Map of Kenya showing arid and

semi arid districts

Source: Presentation: Kenya Livestock Insurance

Program by Vincent Githinji (MALF Kenya) 09.06.2015

Program Launch

• 1-Oct-2015

• 2 counties with 26 insurance units

• Cover Period:

Short rain Oct-Feb

Long rain Mar-Sep

• 5,012 farmers covered 1st Cover Period

Program Expansion

• 1-Oct-2016

• 6 counties with 70 insurance units

• Severe drought during short rain Oct-Feb

2016/17

• 88% or 62 of insurance units got triggered

where losses paid to herders in feeding

over 50,000 animals

• 12,064 farmers covered 2nd Cover Period


Technological aspects of KILP

20

CelsiusPro is the calculation agent for KILP and therefore responsible of calculating the

NDVI values per Insurance unit used to calculate the risk and the payouts.

Below a screen shot for the selection of the Insurance Units.

Outlined the

Insurance Units of

the first 2 counties

for the KLIP .

It is planned to

further extend the

regional scope to

cover as many as

14 counties.


County Season Progress and Past Conditions

21


Insurance Unit Season Progress

22


Payout Report

23

The official payout

reports are generated at

the end of the season.


Questions

24

RIICE: Remote Sensing-

based Information and

Insurance for Crops in

Emerging Economy

25

Manoj Yadav, Project AdvisorGIZ

Remote Sensing-based Information and Insurance for Crops in Emerging Economy

Application of Remote Sensing Technology

in Crop Insurance

Experience from RIICE project in Tamil Nadu, India

REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES

Using remote sensing information in Crop Insurance

Bi-weekly information on crop growth status, derived by European and Indian cloud-free satellite data

Observation on delays in rice growing helps to guide decision on Preventive Sowing/ On Account Payment Cover

End-of-season yield estimation at village level can guide Crop Cutting Experiments (“Smart sampling”)


Large scale, high

resolution SAR-

RS of rice areas

Crop models

adjusted by

remote sensing

Smartphone

based rapid data

collection

Cloud platforms

scalable, reliable

and timely+ + +

All remote sensing data stored,

processed and analyzed on the cloud.

All field data collected by mobile phone,

sent to the cloud over mobile or Wi-Fi

network.

Timely, detailed, and accurate information

made available to the users.

Turning the value chain of crop information digital

Leveraging new technologies

Information delivered through remote sensing analysis:

• How much area was planted this season in each

district/block/village?

• What was the yield in each district/block/village?

• Was production more or less than last year?

• Was the harvest early or late?

• Adverse climatic conditions: flood or drought?

– Where and how much area was affected?

– How much yield was lost in such areas?



Where? Rice area detection and acreage estimation at village level

Rice Map of Kodavasal Block,

Tiruvarur District

Rice Map of Vayalore Village,

Kodavasal Block, Tiruvarur District


Rice Area in Navalur Kuttapattu village, Manikandam Block, Trichy District

2016-172015-16


When? Start of season

Cauvery delta region, Tamil Nadu


How much?

Yield estimation at village level

Rice Yield Map of Vayalore Village of Kodavasal Block, Tiruvarur District, Tamil Nadu


Application of RIICE technology in Crop Insurance in India

Pre Vegetative Phase

Vegetative & Reproduction

Phase Maturity Phase

Prevented/Failed Sowing

On Account Payment

CCE Based Compensation

Start of Season & Early Rice Area

Maps

Mid Season Yield Forecast for

Expected Yield

End of the Season Yield Estimates &

Smart CCE Sampling

Crop Growth Stage V

illage level Imp

leme

ntatio

n

Crop Insurance Scheme Features

RIICE Based Crop Insurance Solutions


Information delivered by RIICE and its national partner Tamil Nadu University, helped relief efforts by distributing seeds in Tamil Nadu flood affected areas, after satellite data had been delivered to the state level emergency authorities.

2015 Tamil Nadu flood resulted in loss of rice area being lost

Case Study: Disaster Risk Assessment


Role of RIICE Technology in Crop Insurance in India

Area of improvement RIICE

In-season crop area monitoring & yield estimation

Determination of progress of area sown/emerged

Continuous monitoring of crop health

Efficient identification of homogenous/stress areas

Disaster mapping and loss assessment (Flood & Drought)

Prevented sowing cover and on-account payment

Improved targeting/ Smart Sampling of Crop Cutting

Experiments


Mar-Apr 2016

• RIICE project presented to the, Dept. of Agriculture, Govt. of Tami Nadu

• Dept. of Agriculture recommends RIICE project to be piloted in the 2016 season

July 2016

• RIICE project mentioned as one of the pre-conditions for selection of insurance companies in the Tender Process

Nov 2016

• RIICE project approved by Committee on Crop Insurance for a state wide pilot

• RIICE-team observes late start of season using satellite technology, shares information

Jan-Mar 2017

• Department of Agriculture analyses satellite information on delayed start of Samba season

• Stakeholders consider RIICE based information for insurance pay-outs

• RIICE Pilot extended in 2017 cropping season

RIICE Milestones in Tamil Nadu, India


This is placeholder

text.

All phrases can be

replaced with your

own text.

Summary of experiences and challenges ahead

RIICE Project

Tamil Nadu

2016-17

Products Problem

Solving

Contribution to

Crop Insurance

Challanges &

Future Focus

Areas

• Start of season area maps

• Village wise rice area

• Mid season expected yield

• End of Season yield maps

• Village level yield estimate

• Disaster Risk Assessment

• Field validated products

• World class technology &

expertise

• Timely, scientific transparent

& efficient processes

• Insurance ready solutions

• RIICE Insurance pilot by

State Govt.

• Area discrepncy

• Rapid loss assessment

• In season monitoring

• Village level crop statistics

• Mid season & End of

season yield assessment

• Timely compenssation to

farmers

• Detailing PMFBYfeatures like

prevented sowing, on a/c

payment etc

• Developing a Smart CCE

sampling methodology in

cooperation with DEA

• Availability of quality village

level boundary maps

Thank You

Manoj Yadav

RIICE Project Advisor, GIZ, New Delhi

Email: [email protected]

Mobile: +91-9971784600

mailto:[email protected]

Where can technology best leveraged forinsurance:

1. Data and information gathering

2. Reaching out to clients and improving theexperience of insurance

3. Improve processes to reduce costs

Audience poll 2

40



41

Presenter:Manoj Yadav

Project AdvisorGIZ

Facilitator:Miguel Solana

Senior Technical Officer,Impact Insurance Facility

41

Presenter:Marcel Stäheli

Senior Parametric Product Manager

CelsiusPro

Presenter:Samson Ajibola

Head, Agricultural and Micro Insurance

Leadway

Q&A

The way forward

42

Importance to understand all the household risk dimensions that climate change is triggering

Integration to adaptation mechanisms will be essential for insurance to be sustainable

Leverage technology solutions and foster partnerships

Our next webinars

43

Making inclusive insurance work - A webinar series by the International Labour Organization’s Impact Insurance Facility and UN Environment’s

Principles for Sustainable Insurance (PSI) Initiative

The topics and schedule of the next webinars are as follows:

6. Health – Part 2 – date TBA

7. Insurance regulation – date TBA

unep-psi webinar series "making inclusive insurance work" - session 5: agriculture and...

Government & Nonprofit