Insurance

Insurance is a risk management strategy. Loans may help a household to increase its income but they do not reduce the household's vulnerability or exposure to risks. Easily available savings may help to address this need as households can build reserves from which they can draw in emergency or to smooth cash flow imbalances. However, this still does not help if they are exposed to risks which cause losses that are beyond their means. Insurance products enable the risks faced by households to be pooled and thus provide protection against larger losses.

Library Resources

resource title type year resource
Microinsurance Network Annual Report 2019 Report 2020

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This resource appears in: Insurance

International concern about the impacts of climate change and natural disasters has brought the insurance community together to build resilience and manage risk more effectively. At a time when insurers should be leveraging their risk management skills and not merely selling risk transfer policies, some companies want to reduce their exposure to climate and NatCat risks, potentially shifting the burden to governments and taxpayers. Such thinking not only undermines development objectives, but makes little business sense in the transition to a digital economy.

The COVID-19 pandemic has dramatically added to the risks confronting the poor and vulnerable in countries where health and social care is already stretched, and future welfare provision is far from certain. With climate and health disasters fast becoming the new normal, insurers have a unique opportunity to go beyond ‘business as usual’ and help governments, businesses and households manage the risks they face. The industry’s actions now will determine its relevance after the crisis.

Against this increasingly uncertain background, protecting low-income households and small businesses is even more important than before. Scaling up inclusive insurance is more urgent now than ever. It is encouraging to see signs of increasing interest in using microinsurance to transfer risk, sometimes complemented by macrolevel sovereign risk management and aggregated meso-level solutions. InsurTech has the potential to help achieve the scale needed, but the lack of digitalisation in some markets is frustrating. Progress on digital payments remains slow. Regulators need to be more open to innovative solutions for serving low-income consumers. We need to rethink the way we regulate technology and innovation if insurance is to grow and significantly reduce the impact of risk in low-income markets.

 

How are insurers in sub-Saharan Africa being affected by and responding to COVID-19 Document 2020

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This resource appears in: Insurance

As a result of the COVID-19 pandemic, FSD Africa and Cenfri are focusing some of their research on how insurance markets across SSA are responding to the crisis.

- Many insurers are experiencing or will experience challenges to their operations and business models, resulting from COVID-19 and limitations due to social distancing and lockdowns and, perhaps, significant increases in claims.

- However, some insurers are seeing increasing interest in insurance products. As such, this crisis is in some ways an opportunity for insurers and insurance products to demonstrate their relevance and ability to have a real impact during a crisis. 

This document presents the preliminary insights from the calls with insurers across sub-Saharan Africa to discuss how the pandemic has affected their internal and external business operations and how they have responded thus far. 

Integrated risk management solutions Multimedia 2020 English (en) English (en)

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This resource appears in: Insurance

On March 31, 2020, the Impact Insurance Facility, in partnership with the Prudential Foundation, organized a webinar on integrated risk management solutions.

When one thinks about risk management and finance, one immediately thinks about insurance. Insurance can be an effective way of managing risks that could otherwise result in large losses, which low-income people cannot cope with out of their cash flow or through the informal support of friends and relatives. To be most effective, however, insurance should be part of a broader range of financial services that includes savings, credit and money transfers, which together enable the working poor to manage a variety of risks. 

To test new approaches, the ILO is currently working with partners in Asia to develop integrated risk management solutions. This webinar presents the experiences of four partners who are developing savings-linked risk management solutions to help members better manage risks related to health, calamity and life. 

The featured partners include: KOMIDA, a non-profit MFI in Indonesia, Oro Integrated Co Operative (OIC) and Nabunturan Integrated Co Operative (NICO), two savings and credit cooperatives in the Philippines and CLIMBS, a cooperative insurance in the Philippines. The webinar presents lessons from the product development process and results from ongoing pilots.

Panelists of this webinar were Craig Churchill (Chief of the ILO's Social Finance Programme and Impact Insurance Facility), Reinhard Marcellino (Impact Insurance Fellow at KOMIDA) and Preeti Sancheti (Impact Insurance Fellow at CLIMBS). This webinar was moderated by Aparna Dalal (Senior Technical Officer, Impact Insurance Facility).

Webinar Page  -  English (en)

SlideShare  -  English (en)



Publisher Impact Insurance Facility, Prudential Foundation
Primary Language English (en)
Region / Country Global, Asia
Keywords integrated risk management solutions
Related Resources
COVID-19 and the Insurance Industry: Why a Gender-Sensitive Response Matters Technical Note 2020

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The COVID-19 pandemic has taken the lives of hundreds of thousands of people, disrupted economies, and affected supply chains and business sectors across the world. Insurers have experienced natural catastrophes and viral outbreaks, such as Severe Acute Respiratory Syndrome and Middle East Respiratory Syndrome, before, but the global nature and scale of the COVID-19 crisis is especially challenging for insurers. Although the industry is likely to survive the crisis as it has others in the past, insurers need to determine how best to meet the needs of their customers, agents, and staff with products, financing,
sales, and service that are suited to the unprecedented scale of the pandemic.

The global response to the pandemic has highlighted new approaches that insurers should consider, including customercentric digital tools and other innovations that respond to stakeholders’ needs. It has also become increasingly clear that insurers need to tailor their products and processes to the differing risks and needs of men and women and commit to mitigating the extent to which this pandemic widens the gender gap.

This guidance note has been prepared to highlight insurance industry best practices on how to engage with, and support women clients and agents. In addition, it explains how women can contribute to the success of the insurance industry, and how best to engage with them during the crisis. While many of the points covered in this note apply to both genders, this note focuses on meeting the needs of women. Insurers’ responses to COVID-19 have the potential to either increase or reduce public confidence in the industry. Due to the key roles that women play in their households and communities, if insurers adopt a gender-sensitive approach, they can positively influence women’s perceptions of the industry, and increase women’s understanding and willingness to buy insurance products that improve the resilience of their families and their businesses. 

The insurance for small-scale fisheries Reference Material 2020

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This resource appears in: Insurance

The insurance for small-scale fisheries brochure describes why insurance is important for the sustainable development and management of small-scale fisheries. It discusses the benefits and challenges of insurance, as well as options for insurance provision to small-scale fishers and what insurance for small-scale fisheries looks like. Traditional and alternative models for small-scale fisheries insurance are presented and the brochure gives ideas for creating an enabling environment for insuring small-scale fishers.

Information on recent FAO publications that support fisheries insurance is included.

Institutional options available to ensure that Index-based Flood Insurance (IBFI) is socially inclusive in Bihar, India Brief 2020

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This resource appears in: Rural Financial Services, Insurance

Flood disaster is one of the greatest challenges affecting the livelihoods of the people of Bihar, India, hampering interventions aimed at addressing poverty, nutrition and health issues. Small and marginal farmers, tenant farmers and female-headed households are the most vulnerable to floods. Past insurance schemes implemented in Bihar, including both conventional and index-based flood insurance (IBFI) schemes, have been largely biased towards larger farmers. As a result, such schemes failed to reach the small and marginal farmers, and other vulnerable groups, despite them being the most in need of risk transfer mechanisms (Singh and Singh 2013). An institutional mapping was followed by interviews conducted with key stakeholders engaged in crop insurance schemes. Based on these interviews, this brief attempts to highlight the existing institutional mechanisms that can support tenant farmers and other vulnerable groups to gain access to IBFI. It also explains how the line agencies of the Government of India (GoI) and the State Government of Bihar (GoB) could use the identified institutional mechanisms to support the future upscaling of IBFI schemes.

Never waste a crisis – how sub-Saharan African insurers are being affected by, and are responding to, COVID-19 Technical Note 2020

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This resource appears in: Insurance, Policy Advice: General

COVID-19 containment and mitigation measures in sub-Saharan Africa (SSA) have restricted the movement of people, goods and services.

This has affected insurers’ operations, which, to a large extent, have traditionally required physical engagement. It is also affecting insurers’ ability to launch new products, conclude new sales, collect premiums, service existing customers and process and pay claims.

Moreover, the economic crisis triggered by the pandemic is affecting premium and investment income, and balance sheets are put under strain. While the pandemic has exacerbated pre-existing weaknesses of the insurance sector in SSA, it also provides an opportunity for insurers and regulators to become better equipped to embrace and adopt innovation and develop their insurance markets.

This note takes stock of the impacts of the pandemic on insurers, based on interviews with 34 insurers, insurtechs, reinsurers and insurance and broker associations across 18 markets, looking at the impacts on operations, impacts across the insurance product cycle, balance sheet impacts and the regulatory engagements and responses. The report identifies key opportunities for insurance and regulators.

The pandemic and the accompanying safety measures have affected the way insurers operate, the insurance product cycle, the potential reputation of insurers due to COVID-19 exclusions, as well impacting balance sheets that will likely result in liquidity constraints. There have been varied engagement from regulators; with some being very proactive in their communication surrounding the pandemic while others have been slow to respond and have created feelings of uncertainty in the insurance sector.

While the pandemic has exacerbated pre-existing weaknesses of the insurance sector in SSA, the consultations for this study indicate that it also provides an opportunity for insurers and regulators to become better equipped to embrace and adopt innovation and develop their insurance markets. Some of the opportunities identified in the report are that the forced digitisation of insurers can help them enhance their efficiency as well adopt the remote on-boarding of customers, and COVID-19 has created an imperative for regulators to address the barriers to digitisation as well as proactively encouraging innovation in the sector.

Author Lucia Schlemmer, Kate Rinehart-Smit and Jeremy Gray
Publisher FSD Africa and Cenfri
Number of Pages 36
Primary Language English (en)
Region / Country Africa
Keywords Coronavirus (COVID-19), Insurance, regulatory engagement
Related Resources
Agricultural insurance for smallholder farmers: Digital innovations for scale Report 2020

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Globally, less than 20 per cent of smallholder farmers have insurance. Low awareness of insurance products and the high cost of premiums have restricted farmer uptake of indemnity-based insurance services. Insurance providers have largely overlooked smallholders due to the cost of acquiring and serving rural customers.

Index insurance offers ways of overcoming some of the challenges of indemnity-based agricultural insurance models, such as high operational costs, the cost of premiums and the ease of settling claims. However, service providers face difficulties such as poor historical and current weather data availability, inadequate government support to provide certain index insurance services and effective distribution. To overcome these problems, index insurance services have been using mobile and satellite technology to digitise service creation and delivery, enhancing their potential to scale.

This report looks at how mobile network operators can use their assets to drive the adoption of index insurance services in developing countries. For instance, mobile technology can be used to register and locate farmers, mobile money can be used to collect premiums and pay out claims, and commercial microwave link data from mobile networks can be used to monitor rainfall. We analyse the challenges service providers face in scaling index insurance and the potential opportunities for growth through partnership-based approaches.

Exploring Community-Based Financing Schemes to Finance Social Protection Paper 2020

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This resource appears in: Rural Financial Services, Insurance, Country studies, Asia and Pacific

Social protection, especially health care systems for the poor, is essential to reduce inequality.

Health-related shocks, such as death or severe sickness, can affect households’ budgets significantly and create serious household trauma, leading to higher possibilities of them falling into poverty traps. The main challenge of social protection is improving coverage to provide services to people in rural and resource-poor environments. Microfinance health-related services, such as community-based health insurance, are expected to fill the gap. However, this concept also faces many challenges, including sustainability, governance, a lack of data, and a lack of capable human resources to manage it. On the other hand, the fast development of financial technology has raised the development of the crowdfunding platform for medical services. However, this concept only finances the medical expenses of people with a serious disease whom insurance or research for new medicine or treatment do not cover.

The paper will explore new and innovative ways of financing social protection, especially to improve access to health care services for poor and marginalized communities. Taking advantage of the development of financial technology and looking at how we can address the failures of community-based forms of health insurance, it will connect the sustainable financing concept, such as hometown investment trusts (HTITs) and crowdfunding, with community-based forms of health insurance. This paper will propose two models: (1) the two-step HTIT health insurance model; and (2) the integrated HTIT health insurance model.

Author Naoyuki Yoshino, Nella Sri Hendriyetty, and Erica Paula Sioson
Publisher Asian Development Bank Institute
Number of Pages 24
Primary Language English (en)
Region / Country Global, Asia
Keywords community-based health insurance, crowdfunding, hometown investment trust fund
Related Resources
Making agricultural and climate risk insurance gender inclusive Brief 2020 English (en)

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This resource appears in: Rural Financial Services, Insurance, Gender

IFAD’s technical assistance programme INSURED (Insurance for rural resilience and economic development) has been building knowledge about how to strengthen women producers’ access to climate risk insurance. Working with partners, INSURED supported research, and fieldwork in Ethiopia including group discussions with smallholders about insurance options. 

Rural women in developing countries play a huge and diverse role in agriculture. Some are smallholders, others are wage labourers or unpaid workers on family farms. Some women are members of producers’ groups with independent incomes, or are in charge of market gardening for consumption and sale. Often with multiple roles, they are all part of the female farming community and pillars of rural household development. Overall, women make up about half the agricultural labour force in developing countries, and a smaller percentage own a farm. Together with their heavy burden of care work, they therefore shoulder significant responsibilities for both food production and income generation.
Farmers in developing countries live and work in high-risk environments, but not everyone is equally vulnerable. Women and men respond to risks differently, and women are harder hit by shocks. Women are more likely to die in natural disasters or suffer more from resulting food shortages, and their lower levels of economic participation undermine their resilience. Women’s vulnerability is rooted in interlocking inequalities. These include restricted access to resources, lower levels of land and livestock ownership, and of education. Because they mainly work in the informal sector, women have low levels of formal social protection. In addition, the impact of shocks on the whole household may affect them disproportionately. Crucially, they lack access to agricultural risk management techniques and to formal financial systems, including risk transfer options such as agricultural and climate risk insurance. 

Document  -  English (en)

Case Brief: NBC Mozambique Case Study 2020

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This resource appears in: Insurance

Mozambique faces high levels of financial exclusion, particularly among the two thirds of the population living in rural areas. Access to insurance is low and awareness and knowledge is low.

NBC Companhia de Micro-seguros (NBC Mozambique) was established in 2014 and is currently the only licensed microinsurer in Mozambique. NBC Mozambique is part of NBC Holding, a South African group which focuses on pension funds and the company is therefore linked with Mozambique Previdente, Mozambique’s first private pension provider. 

This Case Brief showcases Impact Insurance's partnership with NBC Mozambique through which they identified and secured partnerships to distribute microinsurance in the country.

The potential of remittance-linked insurance products in sub-Saharan Africa Technical Note 2020

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This resource appears in: Insurance, Remittances and payments

Remittances are particularly important serve as a lifeline to many households. Yet insurance products that enable the sustained flow of remittances or the resilience of senders and receivers remain unexplored in sub-Saharan Africa(SSA).  Both remittance senders and receivers face unexpected risk events that have negative effects on their livelihoods, they often do not employ appropriate coping mechanisms to manage the risk events. 

Distributing insurance through remittance service providers (RSPs), e.g. remittance-linked insurance products, has the potential to build resilience by unlocking greater formal remittance flows to SSA, as well as by increasing insurance uptake to help close the risk protection gap. Transferring risk to an insurer will enable the continued flow of remittances despite senders facing a risk event. Consequently, the welfare of the remittance receivers, who are often highly dependent on remittances for their livelihoods, is protected by ensuring that remittance flows are sustained despite risk events faced by senders. Insurance can also help to smooth the financial burden on senders when remittance receivers incur a shock and require senders to help tide them over. 

This note outlines why remittance-linked insurance products are important, what forms they could take, the business case for such products and the regulatory challenges that still need to be overcome to enable the introduction of such products on the continent.  

Social Finance Annual Report 2019 Report 2020

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This resource appears in: Rural Financial Services, Insurance, Microfinance institutions

This report highlights the work of the ILO’s Social Finance Programme in 2019 and is structured around three segments of the financial sector:

(a) banks, microfinance institutions and credit unions working on financial inclusion;

(b) insurers that are contributing to development objectives, which we refer to as impact insurance; and

c) investors that are subscribing to a sustainable investing agenda.

Micro-insurance Principles and Guidelines Training Guide 2020

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This resource appears in: Insurance, Policy Advice: General

For over 10 years, the insurance industry in Zambia has not had any guiding rules for microinsurance. FSD Zambia and the Technical Advisory Group (TAG) on microinsurance have been working to establish an enabling environment to support microinsurance consumer insurance products and services that serve the most vulnerable populations in the country. In April 2020, the Pensions And Insurance Authority (PIA) released the Micro Insurance Principles And Guidelines aimed at promoting good and sound business practices in the microinsurance consumer insurance products. PIA has further engaged FSD Zambia to support an official launch of the guidelines and seal that will be granted when firms demonstrate full adherence to the guidelines.

Aquaculture insurance for small-scale producers Reference Material 2020

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The brochure on aquaculture insurance for small-scale producers describes why aquaculture insurance is important for the sustainable development and management of the aquaculture sector. It discusses the benefits of aquaculture insurance and challenges in making aquaculture insurance accessible to small-scale producers. It further describes various types of insurance products that are important to small-scale producers. Case studies from China and Thailand are presented, as well as an innovative approach to bring insurance services to aquaculture producers through existing fish feed industry networks. The brochure also provides ideas for creating an enabling environment for insuring small-scale aquaculture producers.

FAO will be printing and distributing hardcopies of these brochures and distribute the full blue finance guidance notes package at international Blue Growth and Blue Economy conferences. 

Making index-based flood insurance socially inclusive in Bangladesh: Challenges and options Brief 2020

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This resource appears in: Rural Financial Services, Insurance

Floods and other weather-related disasters plague farmers in Bangladesh, and climate change threatens to exacerbate these risks. At stake are the livelihoods of millions of small and marginal farmer households that are at risk of becoming further entrenched in poverty. Lack of compensation or other buffering mechanisms means crop losses give rise to deepening cycles of debt, especially when cultivation is financed through loans. While neighboring India has developed strong policy and strategic direction for using risk transfer mechanisms, such as Weather Index Insurance (WII), as a disaster risk reduction tool, policy support in Bangladesh is lukewarm. To date, most WII schemes have been pilots implemented mainly by nongovernmental organizations (NGOs) and donors. The Index-based Flood Insurance (IBFI) project of the International Water Management Institute (IWMI) hopes to adapt the pilot scheme it is trialling in Bihar, India, to Bangladesh. To understand how such a scheme can be made accessible, especially to marginal groups, fieldwork was undertaken in Sirajganj district. Here, a WII pilot project, funded by the Asian Development Bank (ADB), which offers insurance for crops during both the Aman and Boro seasons is ongoing. This brief is informed by findings from this fieldwork.

Publisher CGIAR
Number of Pages 6
Primary Language English (en)
Region / Country Global, Asia
Bangladesh
Keywords Bangladesh, Index-based Flood Insurance (IBFI)
Related Resources
Compulsory Insurance (Third Party Liability) Requirements For Fishing Vessels: A Case For The Introduction Of Compulsory Fishing Vessel Insurance In The Caribbean Report 2020

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While all vehicles on the roads require compulsory third party liability insurance, this is not the case for fishing vessels.  A recent study shows that introduction of compulsory third party liability insurance for fishing vessels in the Caribbean is possible in most Caribbean countries with only minor legislative amendments and states that if such insurance is introduced it would contribute to improving the working conditions of fishers, their safety and to more responsible fishing practices.

Fishing is amongst the most dangerous occupations in the world and accidents and fatalities in smallscale fisheries are common. Many fisherfolk who get an accident during their working life, cannot work for some time or end up disabled. This creates financial and social hardship for these fishers and their families. Introduction of third party liability insurance will protect boat owners and crew of fishing vessels, reduce the vulnerability of fishers and their families to shocks caused by accidents in fishing, and will contribute to sustainable fisheries livelihoods. An estimated 3 percent of the fishing vessels operating in the Caribbean region are currently insured and less than 20 percent of the fishers have life and/or health insurance cover. Recommendations have been made by fisheries authorities in the Caribbean for introducing third-party liability insurance for commercial vessels, similarly as
vehicle insurance, which is mandatory throughout the Caribbean. Fisherfolk organizations are supportive of such insurance, particularly as it will provide cover for crew of fishing vessels as well.

This circular summarizes the findings of an FAO assessment of legal frameworks in five Caribbean countries (Barbados, Dominica, Saint Kitts and Nevis, Saint Vincent and the Grenadines and Trinidad and Tobago) in terms of entry points for introducing fishing vessel insurance. It also contains an overview of international conventions governing marine insurance and examples of mandatory fishing vessel insurance legislation from selected countries. The origins of compulsory third party liability insurance in the maritime industry and its introduction in international instruments (e.g. the Bunkers Convention, the Wreck Removal Convention, and the EU Directive 2009/20/EC) are discussed. The benefits of introducing compulsory third party liability insurance for everyone involved in the fisheries industry (claimants, shipowners, and society in general) in line with those in the merchant shipping industry are presented. Model regulations to facilitate introduction of compulsory third party liability insurance for fishing vessels are provided, as well as information to support fishers’ awareness raising and capacity building on this subject. This circular also contains the proceedings of a Stakeholder Meeting on Fisheries Insurance Legislative Frameworks for the Caribbean, held on 15 November 2019 in Barbados, where the assessment findings, best-practices and model regulations were presented.

This circular makes a case for introduction of compulsory third party liability insurance for fishing vessels in the Caribbean, and claims that such insurance contributes to improving the working conditions of fishers, their safety and to responsible fishing practices.

 

Author Norman A. Martinez Gutierrez; Raymon van Anrooy
Publisher Food and Agriculture Organization of the United Nations (FAO)
Rome
Number of Pages 119
Primary Language English (en)
Region / Country Americas
Barbados, Dominica, Saint Kitts and Nevis, Saint Vincent, Saint Vincent and the Grenadines, Trinidad and Tobago
Keywords Insurance, Third party liability, Caribbean
Related Resources
Impact Insurance: Putting client insights into practice: Six springboards Paper 2019

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When serving new market segments, many insurers are comfortable carrying out customer research. Where insurers often get stuck is putting those insights into practice. Organizations can shift their approaches and internal setups to make it easier to regularly act on client insights. This brief provides a range of strategies that can be used to do so – springboards towards a culture, structure and operations that are capable of responding to client needs.

Making a profitable inclusive insurance business: a case study of Britam, Kenya Case Study 2019

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In 2007, Britam, a diversified financial group based in Kenya, launched its first microinsurance product targeting the low-income population in Kenya. Over the past 11 years, Britam has established a profitable, independent business unit - Britam Microinsurance - that is the market leader in microinsurance in Kenya, covering more than 700,000 lives in 2017. Britam’s journey has generated many lessons that can guide other insurers who intend to build a profitable business serving populations traditionally excluded from the insurance market. This case study highlights some of the key takeaways. 

Report of the Expert Workshop on Guidelines for Micro-finance, Credit and Insurance for Small-scale Fisheries in Asia Report 2019 English (en)

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This resource appears in: Credit unions, Insurance, Microfinance institutions, Agricultural insurance, Asia and Pacific, Investment

The Expert Workshop on Guidelines for Micro-finance, Credit and Insurance for Small-scale Fisheries in Asia was held in Bangkok, Thailand in the period 7-9 May 2019. Rural finance, insurance and fisheries experts from Bangladesh, China, India, Indonesia, Japan, Philippines, Thailand, UK, Canada and the USA met to discuss ways to improve the access to financial services for small-scale fishers in Asia. The workshop aimed to discuss successful finance and insurance programmes in Asia for small-scale fishers, finalize practical guidelines in support of better access to financial services, and design a capacity building programme for increasing the provision of finance and insurance services to small-scale fisheries. The workshop was attended by 32 experts and was organized by the Asia-Pacific Rural and Agricultural Credit Association (APRACA) in close collaboration with FAO. The insurance and credit guidelines prepared will facilitate the implementation of the Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries in the Context of Poverty Eradication and Food Security (SSF Guidelines), as well as contribute towards achievement of Sustainable Development Goal 14. Access to finance and insurance services will enable the small-scale fishers to invest in more responsible fishing operations and technologies, reduce overfishing, contribute to fisheries management and implement climate change adaptation measures. The micro-finance, credit and insurance guidelines for small-scale fisheries have been endorsed by APRACA members in June 2019, and implementation throughout the Asian region is promoted.

Guideline and Technical Paper  -  English (en)

Technology in Microinsurance: How New Developments Affect the Work of Actuaries Report 2019

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Microinsurance is a strategy that makes appropriate insurance coverage available to low-income people. Financial losses that result from health, business, casualty, life, and natural disaster risks may produce devastating consequences for vulnerable populations. In overcoming the various challenges faced by low-income people, a growing number of innovations and technologies have emerged in the arena of microinsurance. Moreover, there is a growing number of reference reports that highlight the evolving intersections of the actuarial profession with technological innovation. As a result, the Society of Actuaries (SOA) commissioned the MicroInsurance Centre at Milliman to develop a literature review on the use of technology in microinsurance.

To give a frame of reference for actuaries to use in their work, this literature review provides insights on emerging technologies that interact with the actuarial profession within the space of microinsurance. This report also provides a foundation for understanding the evolving role of technology in microinsurance, as well as its potential impact on insurance and the actuarial profession. Furthermore, it intends to spark readers’ interest in and create a vision for how microinsurance and its associated technologies might impact the actuarial industry in the future. It also provides ideas for how key ‘micro Insurtech’ topics could evolve in the future. 

To achieve the research objective, this literature review assembles a collection of publicly-available articles, reports, presentations, books, blog posts, podcasts, videos, and other resources that actuaries and other interested stakeholders can reference. The resources were assembled through desktop research and key-person interviews. 

INSURED - Insurance for rural resilience and economic development Brief 2019

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This resource appears in: Rural Financial Services, Rural Financial Services: General, Insurance, Agricultural insurance

The paper examines a technical assistance programme increasing the resilience of poor rural households to climate risks. It explores insurance for rural resilience and economic development. 

INSURED is a USD3.8 million programme financed by Sida (the Swedish International Development Cooperation Agency) and implemented by IFAD through the Platform for Agricultural Risk Management (PARM). The four‑year programme’s goal is threefold: – increase the resilience of poor rural households in the face of climate risks – build their capacity to manage risks – strengthen their livelihoods. The overall objective of INSURED is to protect the incomes of rural women and men and to promote investment in smallholder agriculture – by smallholders themselves and the public and private sectors, including financial service providers, value chain actors and governments. 

Key Facts

  • INSURED promotes climate and agricultural insurance as a cross-cutting tool in rural development 
  • USD 3.8 million
  • Financed by Sida
  • Four years: 2018-2021
  • Implemented by IFAD through PARM
  • Geographical focus: Global – with core activities in Cambodia, Indonesia, Uganda, Zambia
Author Massimo Giovanola, Technical Specialist at IFAD, and Emily Coleman, Financial Inclusion and Insurance Expert at IFAD
Publisher International Fund for Agricultural Development (IFAD)
Number of Pages 2 pages
Primary Language English (en)
Region / Country Global
Keywords rural resilience, Economic Development, Technical Assistance, smallholder investment in agriculture
Related Resources
Guidelines for increasing access of small-scale fisheries to insurance services in Asia 2019

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This resource appears in: Insurance

These Guidelines for increasing access of small-scale fisheries to insurance services in Asia have been developed to support the implementation of the Voluntary Guidelines for Securing Sustainable Small-Scale Fisheries in the Context of Food Security and Poverty Eradication (SSF Guidelines).

The purpose of these Guidelines is fourfold, i.e.

• to increase awareness about the needs of small-scale fishers for better risk management, disaster preparedness and insurance services;

• to guide policy and decision makers to help introduce insurance services to small-scale fishers, with the ultimate objective to strengthen the sustainability and ecological and economic viability of these fisheries;

• to build capacity among insurance providers, fisherfolk organizations, NGOs, and concerned government agencies, to design and implement insurance programmes that suit the needs of small-scale fishing communities and enhance social protection;

• to promote insurance services that incentivize and reward a responsible and sustainable conduct of fishing operations and a better preparedness for natural disasters including climate change related challenges.

These Guidelines commence by elaborating on the context and framework, in which insurance programmes for small-scale fisheries should be conceived. It is explained why most small-scale fishers are presently not insured. Major risks and consequences faced by fishers are identified. Risks include capsizing, grounding, collision and sinking of vessels; fire on board of vessels or in port; injury or death of crew as a result of above, human errors during navigation or fishing operations; oil spills or other pollution caused by fishing vessels; theft and vandalism, when moored in port; piracy

Rethinking Climate Finance – Taking Action against Climate Change. Opportunities and Challenges for Financial Players Report 2019

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This resource appears in: Rural Financial Services: General, Insurance, Policy Advice: General

Failure to act on climate-related risks can have potentially devastating consequences. Human lives could be affected by a long list of disastrous outcomes, such as more frequent natural catastrophes, health problems and an escalation in hunger and water crises as well as migration flows. Scientific evidence shows that less-developed countries would be the most affected. Furthermore, climate-related risks could also present significant economic losses in the financial system. Scenarios vary substantially depending on how and how fast we react to climate change and move towards a new low-carbon economy.

On the other hand, this necessary shift to a new low-carbon economy also presents important investment opportunities. Financial investments directed toward mitigating climate change effects and adapting to negative consequences are referred to as climate finance. Both the public and private sectors need to increase their climate finance investments to reach the climate targets outlined in the Paris Agreement and the United Nations’ Sustainable Development Goals (SDGs). Therefore, a partnership between the public and private sectors that maximises synergies and mobilises capital, while setting clear impact targets toward climate change adaptation and mitigation, is crucial. Without it, achieving the Paris Agreement targets and SDGs is at risk.

Against this backdrop, BlueOrchard has collaborated with the FINEXUS Center for Financial Networks and Sustainability at the University of Zurich to analyse the climate finance market’s most recent dynamics. This paper builds on both organisations’ experience and knowledge in the asset-management industry, focussing on the relevant aspects and importance of climate finance for the different players in the asset-management value chain. It highlights the urgent need for private financial players to react to climate-related risks. Moreover, this paper attempts to show that reasonable commercial incentives exist for the private sector to increase its engagement in climate finance. A case study illustrates a scenario of a disorderly transition to a low-carbon economy with two hypothetical portfolios: a ‘brown’ bond portfolio and a ‘green’ bond portfolio with comparable average annual returns. After the disorderly transition, both portfolios are adversely impacted, but the impact is much stronger in the ‘brown’ portfolio. Climate finance can thus be viewed as an opportunity to develop portfolios that are more resilient to climate-related risks in the long term. 

To successfully unlock private capital at scale, climate finance must be developed further and investment vehicles must be customised to meet private investors’ needs and expectations. In order to better understand them and to identify the extent of their activities in climate finance, BlueOrchard conducted a survey among its private sector investors. The survey’s main findings show: i) the limited understanding and reporting of climate-related risks; ii) the moderate exposure of private investors to climate finance; iii) their strong interest in further expanding their sustainability portfolios and including climate finance; and iv) the need for public and private sector actors to work together in constructing an inclusive, forward-looking climate finance strategy.

Author Maria Teresa Zappia, Veronika Giusti Keller, Stefano Battiston
Publisher BlueOrchard
Number of Pages 36 pages
Primary Language English (en)
Region / Country Global
Keywords climate finance, Insurance
Related Resources
Managing Climate Risk with Extreme Weather Insurance Brief 2019

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The Inclusive Insurance Factsheet Series, developed by the GIZ Sector Programme “Global Initiative for Access to Insurance”, highlights how insurance as a tool contributes towards meeting the needs of vulnerable individuals, households and micro, small and medium-sized enterprises (MSMEs) in developing countries and emerging economies. It furthermore accentuates insurance’s role in helping achieve goals of the following development agendas: sustainable development and poverty alleviation, gender and women’s empowerment, agricultural development and food security, MSME development, and climate change mitigation and adaptation.

Case Brief: AXA Indonesia Case Study 2019

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AXA is an insurance and asset management group serving 107 million clients in 64 countries. AXA intends to reinforce its growth in the years ahead by intensifying its presence in high-growth markets and among low- to middle-income families. AXA Indonesia is one of the leading financial service providers in Indonesia, with four entities that offer life and general insurance. Two of these entities are joint ventures with Mandiri Bank.

Case Brief: APA Insurance Report 2019

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APA Insurance Limited is one of the largest insurance companies in Kenya. The company has a specific team focused on microinsurance and agriculture insurance. This Case Brief focuses on APA's role in the development of Kenya's strong agricultural insurance market. 

Inclusive Insurance: Closing the Protection Gap for Emerging Customers Report 2018

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This report details the factors spurring inclusive insurance around the world. It reveals how both traditional and new insurers are breaking open new markets and reaching underserved customers through the use of innovative technologies, business models, product design, and partnerships, enabled by effective regulatory environments.

The report is based on extensive interviews with commercial insurers and insurance experts who are making inclusive insurance work as a successful business model. With insights from players at the frontlines, the report identifies the main challenges of providing insurance to lower income populations, as well as the solutions companies are using to overcome them.

The fndings for effectively serving this target market include:

  • Simplifying products so they are easy to understand, easy to enroll in, and easy to claim against. For institutions, such simple products engender trust and are lower cost to provide.
  • Finding new distribution channels and aggregators-from telcos to farmer cooperatives to banks—to identify and connect with low-income customers.
  • Leveraging digital channels and new “insurtech” (insurance technology) innovations to connect with, and serve, low-income customers.
  • Implementing new business models and products to provide and administer the risk mitigation solutions at scale that meet low-income customers’ needs.
Author Susy Cheston
Publisher Institute of International Finance (IIF); Center for financial inclusion (CFI)
Number of Pages 49 pp.
Primary Language English (en)
Region / Country Global
Keywords inclusive insurance, Financial Inclusion
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Providing insurance responsibly Paper 2018

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Emerging consumers have a real need for protection and insurance holds the promise to reduce their vulnerability to risks while boosting productivity. At the same time, unserved market segments are usually unfamiliar with insurance, may have low trust in this tool or struggle to understand how it works and how it can generate long-term benefits. Therefore, for insurance to have a significant social and developmental impact, these specificities need to be taken into account through a responsible insurance provision approach. But what does responsible mean? 

This paper explores the seven principles of responsible insurance that can guide insurance providers to make the changes needed to become more responsible. If applied to the five stages of the value chain, namely 1) product design, 2) marketing, education, and sales, 3) enrolment, renewals, and premium collection, 4) policy administration and servicing and 5) claims management, they can bring substantial long-term benefits not only to clients, but also to providers. 

EIT Climate-KIC and the future of the forestry sector Paper 2018

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In 2016, EIT Climate-KIC began to explore these questions, and the role that forest management practices could play in enhancing climate innovation. Between July 2016 and March 2017, it organised three stakeholder workshops, in France, Switzerland and Finland, to better understand the current state of the European forestry sector. In November 2016, it launched a call for a series of white papers to increase understanding of the most pressing environmental and economic challenges facing the sector, its partners’ current perspectives on these, and their visions for the future of the sector.

The inputs developed and submitted by these partners together with the work developed by the community in the context of current Climate-KIC innovation projects were used to inform this document. This process also identified some major opportunities for EIT Climate-KIC’s innovation community, and underpins the strategy behind its flagship forestry programme, which will be launched later in 2018.

This document synthesises our sectoral analysis and summarises key visions and challenges identified from our partners’ own white papers and project activities. From a methodological point of view, EIT Climate-KIC wishes to clarify that challenges and case studies related to deforestation in tropical countries have not been included; these themes fall under the remit of a specific sub-group of partners.

EIT Climate-KIC and the future of the forestry sector Paper 2018

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This resource appears in: Insurance

In 2016, EIT Climate-KIC began to explore these questions, and the role that forest management practices could play in enhancing climate innovation. Between July 2016 and March 2017, it organised three stakeholder workshops, in France, Switzerland and Finland, to better understand the current state of the European forestry sector. In November 2016, it launched a call for a series of white papers to increase understanding of the most pressing environmental and economic challenges facing the sector, its partners’ current perspectives on these, and their visions for the future of the sector.

The inputs developed and submitted by these partners together with the work developed by the community in the context of current Climate-KIC innovation projects were used to inform this document. This process also identified some major opportunities for EIT Climate-KIC’s innovation community, and underpins the strategy behind its flagship forestry programme, which will be launched later in 2018.

This document synthesises our sectoral analysis and summarises key visions and challenges identified from our partners’ own white papers and project activities. From a methodological point of view, EIT Climate-KIC wishes to clarify that challenges and case studies related to deforestation in tropical countries have not been included; these themes fall under the remit of a specific sub-group of partners.

Study on the Microinsurance Industry in Nepal Paper 2018

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This report includes brief surveys undertaken to assess the supply and demand for microinsurance in Nepal, and the current challenges and way forward. It also reviews the players in the sector, the microinsurance products on offer and an examination of the risks faced by low-income households, their coping mechanisms and general awareness of the insurance products. A total of 303 respondents representing both microfinance institutions (MFIs) and non-MFI members participated in the survey out of which 153 were MFI members while the remaining 150 were not a member of any MFI.  

The survey found that advancing microinsurance in Nepal is a challenging task. Lack of cost-efficient distribution channels, awareness, adequate infrastructure, and human resources were cited as some of the major obstacles. Regulators and other stakeholders, therefore, need to work together to bring informal microinsurance, a non-regulated financial product used to cover different risks of people, into the mainstream insurance sector. In addition, creating awareness of insurance, developing appropriate products, and using cost-efficient distribution channels are needed to expand microinsurance.

MIGA Annual Report 2018 Report 2018

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MIGA provides political risk insurance and credit enhancement for cross-border private sector investors and lenders, in support of projects in developing member economies across the world. Marking its 30th year of operation, the Multilateral Investment Guarantee Agency (MIGA) has become the third leading institution among the MDBs in terms of mobilizing direct private capital to low- and middle-income countries. This year, MIGA issued a record $5.3 billion in political risk insurance and credit enhancement guarantees, helping finance $17.9 billion worth of projects in developing countries. New issuances and gross outstanding exposure—at $21.2 billion this year—almost doubled as compared to fiscal 2013.

Author Multilateral Investment Guarantee Agency
Number of Pages 27 pp.
Primary Language English (en)
Region / Country Global
Keywords Investment Guarantee, Insurance, Risk Management
Related Resources
Remote sensing for index insurance: An overview of findings and lessons learned for smallholder agriculture Report 2018 English (en) English (en)

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Index insurance is a type of agricultural insurance that can serve smallholder agricultural development and risk management by protecting assets and encouraging productive investments.  Limited availability, accessibility, quantity and poor quality of data on the ground are some of the primary technical constraints preventing scale-up and sustainability of index insurance. Data were the focus of the project “Improving Agricultural Risk Management in Sub-Saharan Africa: Remote Sensing for Index Insurance”.

This publication outlines the project, which investigated overcoming issues with ground data by testing innovative remote sensing methodologies. It aims to give people working in the insurance community, agricultural development and government an overview of remote sensing opportunities and challenges for index insurance, together with recommendations on where further work and investment is needed.

The project was financed by Agence Française de Développement with an additional contribution from the Belgian Federal Science Policy Office, and was carried out by the Weather Risk Management Facility of the International Fund for Agricultural Development and the World Food Programme. The Flemish Institute for Technological Research (VITO) provided significant contributions and support throughout the project.

For full information on the project methodologies, as well as detailed results and outcomes of the performance assessments and evaluation exercises, please refer to Remote Sensing for Index Insurance: Findings and Lessons Learned for Smallholder Agriculture.

Publisher website  -  English (en)

Document url  -  English (en)

Author Coleman, E., Dick, W., Gilliams, S., Piccard, I., Rispoli, F., & Stoppa, A.
Publisher IFAD - International Fund for Agricultural Development
Number of Pages 60 pp,
Primary Language English (en)
Region / Country Global
Keywords Index Insurance, Agriculture Insurance, Climate Insurance
Related Resources
EIT Climate-KIC and the future of the forestry sector Paper 2018

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In 2016, EIT Climate-KIC began to explore these questions, and the role that forest management practices could play in enhancing climate innovation. Between July 2016 and March 2017, it organised three stakeholder workshops, in France, Switzerland and Finland, to better understand the current state of the European forestry sector. In November 2016, it launched a call for a series of white papers to increase understanding of the most pressing environmental and economic challenges facing the sector, its partners’ current perspectives on these, and their visions for the future of the sector.

The inputs developed and submitted by these partners together with the work developed by the community in the context of current Climate-KIC innovation projects were used to inform this document. This process also identified some major opportunities for EIT Climate-KIC’s innovation community, and underpins the strategy behind its flagship forestry programme, which will be launched later in 2018.

This document synthesises our sectoral analysis and summarises key visions and challenges identified from our partners’ own white papers and project activities. From a methodological point of view, EIT Climate-KIC wishes to clarify that challenges and case studies related to deforestation in tropical countries have not been included; these themes fall under the remit of a specific sub-group of partners.

Supporting the Momentum of Paris: A Systems Approach to Accelerating Climate Finance Paper 2018

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Systems thinking approaches provide the potential to identify and measure how international public climate finance actors can interact:

  • With each other, given their own perspectives and constraints on what they can do, their future direction of travel, and direction of their peers.
  • With developing country financial systems, given emerging trends in green finance across the developing world, potentially unlocking new sources of finance.

    The systems approach frameworks developed in this project offer methods to enhance coordination and collaboration among actors both within the international public climate finance system, and during design of interventions within developing country contexts.

    The graphic overleaf provides an overview of needs and gaps drivers across developing countries, against the drivers of public finance actor perspectives.

1. While specific systems and needs are best evaluated on a country by country basis, short-ter- mism, growing risks and volatility are prevalent across developing country financial systems,impacting currency risk evaluation and potential public support for climate policies.

2. Access to finance, the costs of and suitability of current financial products, and lack of tools and methods to enact low carbon and climate resilient projects remain the key barriers to climate finance growth. Political and policy risks in the domestic environment are also cited as a key barrier to address in supporting private finance solutions.

3. The most prevalent instruments and solutions identified include blended or structured finance vehicles, utilising concessional finance; de-risking instruments such as guarantees or insurance; the provision of data and tools to manage uncertain risks; and policy support and technical assistance to reduce or manage political risks.

However, while such solutions are commonly called for, delivering them at scale require some of the major public finance actors in climate finance to adapt and change business models.

Author Padraig Oliver, Bella Tonkonogy, David Wang, Xueying Wang
Number of Pages 22 pp.
Primary Language English (en)
Region / Country Global
Keywords Climate Insurance
Related Resources
The Road to Launching "Bundled Microinsurance" in Fiji: Key Lessons Brief 2018

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As insurance sector stakeholders in various countries strive to develop microinsurance markets, an insurance scheme supplied by the industry at large - rather than by an individual insurer - appears attractive. Industry-backed insurance solutions can avoid or reduce common and potentially costly aspects, such as excessive competition, high administration costs and duplicated marketing efforts. Joint, industry-backed solutions may simplify and reinforce marketing messages and bring more insurer capital to bear, greatly expanding the volumes of policies issued to cover lives and businesses. This “group” approach can help to ensure that a strong customer base can be established that makes the product commercially viable, scalable and replicable across Pacific markets. Until 2017, this concept had not been tested in the Pacific.

Over a two-year period, the Pacific Financial Inclusion Programme (PFIP) worked with the National Financial Inclusion Taskforce (NFIT) Inclusive Insurance Working Group (IIWG) to create an industry-backed, bundled insurance project in Fiji. The bundled product was an opportunity to design a business model that used new partners to harness different specialist abilities, technologies and capabilities that ultimately delivered a compelling customer proposition for Fijians. This focus note shares some important conclusions from the project’s two-year journey from idea to product launch.

The State of Microinsurance 2018: Inclusive insurance for a sustainable future Paper 2018

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There are just 12 years remaining to achieve the UN Sustainable Development Goals (SDGs), and urgent action is needed if no-one is to be left behind. This report, and future editions, will focus on providing concrete examples of how inclusive insurance is contributing to the broad development agenda in a structured way that links directly to selected SDGs.

The report builds on work published by Microinsurance Network (MiN) members in the 2017 report Inclusive Insurance and the Sustainable Development Goals and responds to the need to demonstrate how practice supports theory. It aims to generate healthy debate and spark new ideas on future developments.

Make change happen: Getting insurance providers ready to better serve low-income households Paper 2018

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In order to serve low-income and emerging consumers effectively, insurance providers need to make significant changes to the way they do business. Changes can include finding cost-effective ways to understand the needs of a new market segment, reaching clients through different distribution channels, managing expenses to accommodate for lower margins per policy, and building systems to tackle large volumes of transactions. Insurers may also need to make changes to how they recruit, train, incentivize and retain their staff, how they structure their organization, the technologies they use, and the partners they work with. Starting a change process for an insurer can be daunting, especially given the difficulties in making the business case to serve this market segment. Successful implementation of change requires that the process is managed carefully with a systematic approach.

This paper presents a process that can be used by insurers to initiate and manage the changes required to serve low-income households. The paper presents the experiences of six partners who have tested this change process.

EIT Climate-KIC and the future of the forestry sector Paper 2018

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In 2016, EIT Climate-KIC began to explore these questions, and the role that forest management practices could play in enhancing climate innovation. Between July 2016 and March 2017, it organised three stakeholder workshops, in France, Switzerland and Finland, to better understand the current state of the European forestry sector. In November 2016, it launched a call for a series of white papers to increase understanding of the most pressing environmental and economic challenges facing the sector, its partners’ current perspectives on these, and their visions for the future of the sector.

The inputs developed and submitted by these partners together with the work developed by the community in the context of current Climate-KIC innovation projects were used to inform this document. This process also identified some major opportunities for EIT Climate-KIC’s innovation community, and underpins the strategy behind its flagship forestry programme, which will be launched later in 2018.

This document synthesises our sectoral analysis and summarises key visions and challenges identified from our partners’ own white papers and project activities. From a methodological point of view, EIT Climate-KIC wishes to clarify that challenges and case studies related to deforestation in tropical countries have not been included; these themes fall under the remit of a specific sub-group of partners.

EIT Climate-KIC and the future of the forestry sector Paper 2018

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This resource appears in: Insurance

In 2016, EIT Climate-KIC began to explore these questions, and the role that forest management practices could play in enhancing climate innovation. Between July 2016 and March 2017, it organised three stakeholder workshops, in France, Switzerland and Finland, to better understand the current state of the European forestry sector. In November 2016, it launched a call for a series of white papers to increase understanding of the most pressing environmental and economic challenges facing the sector, its partners’ current perspectives on these, and their visions for the future of the sector.

The inputs developed and submitted by these partners together with the work developed by the community in the context of current Climate-KIC innovation projects were used to inform this document. This process also identified some major opportunities for EIT Climate-KIC’s innovation community, and underpins the strategy behind its flagship forestry programme, which will be launched later in 2018.

This document synthesises our sectoral analysis and summarises key visions and challenges identified from our partners’ own white papers and project activities. From a methodological point of view, EIT Climate-KIC wishes to clarify that challenges and case studies related to deforestation in tropical countries have not been included; these themes fall under the remit of a specific sub-group of partners.

"3-D" Client Value Assessment tool Toolkit 2018

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Smallholder farmers are exposed to a range of agricultural risks. While traditional insurance products are often inaccessible to them, index insurance products might offer an affordable and feasible alternative. But poorly designed index insurance can create more risks than it mitigates. Assessing the benefits that index insurance brings to clients is essential, but has proved challenging.

The 3-D Client Value Assessment tool allows insurance providers to measure the value of their agricultural index insurance products. Merging the Facility’s PACE tool with the AMA Innovation Lab’s calculations for Minimum Quality Standards, this tool provides a multi-dimensional understanding of the value proposition for potential or existing clients.

The tool was developed by the Facility and the Feed the Future Innovation Lab for Assets and Market Access (AMA Innovation Lab) at UC Davis, with support from EA Consultants, as part of the Global Action Network, a project supported by USAID in collaboration with UC Davis.

Listed below are the various components of the 3-D Client Value Assessment Toolkit. The toolkit consists of the tool and supporting documents that can be used to perform the client value analyses. We recommend that you start with the Technical Guide (listed at the top), which explains how to use each of the components.​

Watch the recording of a 60-minute webinar organized on March 29, 2018 in which the tool presented for the first time.​

Contents of the tool:

  • Technical guide
    • Provides guidance on how to conduct a 3-D Analysis of Client Value, using the 3-D Tool and associated documents described below.
  • 3-D tool 
    • Centerpiece of the analysis, which looks at client value across 14 indicators and provides indications on how obtain a scoring for each of them.
  • Workplan 
    • Plan aims to support the planning of a 3-D Analysis of Client Value. 
  • Administrative data checklist 
    • List summarizes important information, administrative data and documentations to collect throughout the analysis.
  • Interview guides 
    • File contains interview guides for covered farmers, management, and sales staff or agents.
  • Working template 
    • Provides step-by-step guidance for analyzing the data collected through the analysis for each indicator.
Pro-poor climate risk insurance: The role of community-based organisations Brief 2018

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In the face of increasingly frequent extreme weather events, the need to manage climate risk becomes more urgent, especially for the most vulnerable countries and communities. With the aim of reducing vulnerability, climate risk transfer in the form of climate risk insurance (CRI) has been gaining attention in climate policy discussions. When properly designed, CRI acts as a safety net against climate change impacts by providing financial support after an extreme weather event. Two main types of insurance enable payouts: indemnity (traditional) insurance or predefined parameters (index-based) insurance. Individuals, groups, or even governments may take out policies with either type of insurance and receive payouts directly (insurer to beneficiary payout) or indirectly (insurer to aggregator to beneficiary payout). Direct insurance is usually implemented at the micro-level with individual policyholders. Indirect insurance is usually implemented through group contracts at the meso-level through risk aggregators and at the macro-level through the state.
While promising, risk transfer in the form of CRI also has its share of challenges. Within the United Nations Framework Convention on Climate Change, the lack of accessibility and afford¬ability of CRI for poor and vulnerable groups have been identified as barriers to uptake. In light of climate justice, asking the poor and climate-vulnerable groups - most of whom do not contribute substantially to anthropogenic climate change - to solely carry the financial burden of risk transfer is anything but just. Employing a human rights-based approach to CRI may ensure that the resilience of poor and climate-vulnerable groups is enhanced in a climate-just manner.
Indigenous peoples are some of the poorest and most climate vulnerable groups. Often marginalised, they rarely have access to social protection. The strong communal relationship of indigenous peoples facilitates their participation in community-based organisations (CBOs). CBOs are a suitable vehicle for meso-insurance, in which risk is aggregated and an insurance policy belongs to a group. In this way, CBOs can facilitate service provision that would otherwise be beyond the reach of individuals.
Conclusions of this briefing paper draw on a conceptual analysis of meso-insurance and the results of field research conducted in March 2018 with indigenous Palaw’ans in the Philippines. We find that CRI needs to be attuned to the differential vulnerabilities and capacities of its beneficiaries. This is particularly true for poor and vulnerable people, for whom issues of accessibility and affordability need to be managed, and human rights and pro-poor approaches need to be ensured. In this context, meso-insurance is a promising approach when it provides accessibility and affordability and promotes a pro-poor and human rights-based approach of risk transfer by:

  • Properly identifying and involving target beneficiaries and duty-bearers by employing pro-poor and human rights principles.
  • Employing measures to improve the financial literacy of target beneficiaries.
  • Designing insurance models from the bottom up.
Author Matias, Denise Margaret; Raúl Fernández; Marie-Lena Hutfils; Maik Winges
Publisher Deutsches Institut für Entwicklungspolitik (DIE)
Primary Language English (en)
Region / Country Global
Keywords Climate Insurance, Community Based Organisation
Related Resources
Sovereign climate and disaster risk pooling 2018

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The G7 InsuResilience Initiative, sponsored by the German presidency of the G7 with the goal of expanding climate risk insurance coverage to an additional 400 million poor and vulnerable people in developing countries by 2020, has already taken significant steps toward expanding existing disaster and climate risk insurance programs and creating new ones. To date, 26 countries in Africa, the Pacific, and the Caribbean and Central America have purchased sovereign catastrophe risk coverage. However, climate and disaster risk insurance coverage for vulnerable people in developing countries is far from comprehensive, and indeed remains low. A key question for G20 consideration is how to strengthen cooperation between G20 countries and developing countries to build solutions that integrate disaster and climate risk into broader financial protection strategies for vulnerable people, and how to set expectations about the role of catastrophe risk pools as a meaningful, cost-effective instrument to that end.

Risk pools can play an important role in moving the management of disaster and climate shocks away from uncertain, ad hoc humanitarian assistance and making it part of planned development. The challenge for the international community is to provide the right set of incentives. Both international partners and potential recipient governments have a responsibility to plan and program financing in advance.

This report focuses on sovereign climate and disaster risk pools as a mechanism to enhance financial instruments available to national and subnational governments.

EIT Climate-KIC and the future of the forestry sector Paper 2018

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In 2016, EIT Climate-KIC began to explore these questions, and the role that forest management practices could play in enhancing climate innovation. Between July 2016 and March 2017, it organised three stakeholder workshops, in France, Switzerland and Finland, to better understand the current state of the European forestry sector. In November 2016, it launched a call for a series of white papers to increase understanding of the most pressing environmental and economic challenges facing the sector, its partners’ current perspectives on these, and their visions for the future of the sector.

The inputs developed and submitted by these partners together with the work developed by the community in the context of current Climate-KIC innovation projects were used to inform this document. This process also identified some major opportunities for EIT Climate-KIC’s innovation community, and underpins the strategy behind its flagship forestry programme, which will be launched later in 2018.

This document synthesises our sectoral analysis and summarises key visions and challenges identified from our partners’ own white papers and project activities. From a methodological point of view, EIT Climate-KIC wishes to clarify that challenges and case studies related to deforestation in tropical countries have not been included; these themes fall under the remit of a specific sub-group of partners.

Climate insurance and water-related disaster risk management Paper 2018

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The number of natural disasters of all types appears to have increased in the last few decades though there is some debate over the evidence for this. What is clear though is that the economic costs associated with extreme weather events have increased. For lesser- developed countries the developmental outcomes have been particularly severe. Recent research indicates that between 1990 and 2015, most economic losses resulted from flooding: around 40% of the total (Daniell, Wenzel, and Schaefer, 2016). Better flood management by governments, for example by China and Japan, seems to have resulted in reduced flood-related losses. Better disaster response and better building and infrastructure have reduced the relative costs in many developed countries. However, for developing countries the necessary regulations and investments are not in place, resulting in them being disproportionately affected when disasters do strike (UNISDR, 2010; Surminski and Oramas-Dorta, 2014).

Many products and initiatives have been developed, but it is not always clear what their effects have been and to what extent they prompt actions to reduce climate risks and build resilience (Gerber and Mirzabaev, 2017). It is necessary to explore the question of how climate- related risk-transfer mechanisms, including insurance, can mobilise water-related disaster risk reduction investments and, by so doing, contribute to development. As the focus is on risk transfer, this paper will cover its role in promoting actions and measures that contribute to the reduction of loss and damage caused by water- related events and, by extension, disaster risk-reduction measures that provide protection from extreme weather events. This paper does not set out to provide solutions or answers to that question. Rather, it seeks to promote a discussion between the insurance and water sectors around this question.

Unlocking smallholder credit: Does Credit-Linked Agricultural Insurance Work? Paper 2018

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This paper reviews possibilities for, and experience with, credit-linked crop insurance, including different types of insurance and credit arrangements, ranging from insurance sold to individual farmers to meso insurance sold to financial service providers to cover losses suffered by farmer borrowers.​

Remote sensing for index insurance. Findings and lessons learned for smallholder agriculture Report 2018 English (en) English (en)

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Index insurance has a role to play in agricultural development and risk management, yet it faces operational and technical challenges to reach scale and sustainability. Data are a key challenge and were the focus of the project “Improving Agricultural Risk Management in Sub-Saharan Africa: Remote Sensing for Index Insurance”. Limited availability, accessibility, quantity and poor quality of data on the ground are some of the primary technical constraints preventing scale-up and sustainability of index insurance. Without sufficient quality data, either it is impossible to design products for some areas and countries, or products that are designed can become unreliable, not compensating when they should. These inconsistencies intensify vulnerability, lead to distrust of insurance, and ultimately have an impact on demand.

This publication details the project, which investigated overcoming issues with ground data by using remote sensing data for index insurance. It describes the different remote sensing options and opportunities available for index insurance, but it also recommends further investment in research and development, supplementary ground data and capacity-building going forward.

The project was financed by Agence Française de Développement with an additional contribution from the Belgian Federal Science Policy Office, and was carried out by the Weather Risk Management Facility of the International Fund for Agricultural Development and the World Food Programme. The Flemish Institute for Technological Research (VITO) provided significant contributions and support throughout the project.

For a summary of key information for people working in the insurance community, agricultural development and government  please refer to Remote sensing for index insurance: An overview of findings and lessons learned for smallholder agriculture.

Publisher website  -  English (en)

Document url  -  English (en)

What People Want - Investigating Inclusive Insurance Demand in Ethiopia 2018

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One important barrier to insurance markets that are more inclusive is the necessity to better understand the needs of low-income and other un- and underserved populations. These people are not currently clients of insurers and are difficult for insurers to reach through normal operations. As a result, many well-motivated efforts to provide client solutions can fail because of a misunderstanding or lack of understanding of the client’s situation. This publication explores the situation in Ethiopia where the population has unserved needs that can be met with affordable products they actually want. The results show a clear gap between the effects of various financial shocks and households’ ability to cope with them and a clear gap of unmet but insurable risks. The results also show that experience with and knowledge of insurance is very low, but this can be leveraged as an opportunity. This study, along with applying generally accepted wisdom, could help innovations in microinsurance more likely to succeed.

Télédétection pour l’assurance indicielle: Une vue d’ensemble des découvertes et enseignements pour l’agriculture des petits exploitants Report 2018 English (en)

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L’assurance indicielle est un type d’assurance agricole qui peut favoriser le développement agricole et faciliter la gestion des risques en protégeant les actifs et en encourageant les investissements productifs. Toutefois, des difficultés opérationnelles et techniques font obstacle à l’expansion et à la durabilité de l’assurance indicielle. Le projet “Amélioration de la gestion des risques agricoles en Afrique subsaharienne: la télédétection pour l’assurance indicielle” a porté principalement sur les données, qui constituent un défi majeur – s’agissant notamment de leur disponibilité, accessibilité, quantité et qualité.

La présente publication, qui décrit le projet dans ses grandes lignes, vise à donner aux personnes travaillant dans les domaines de l’assurance et du développement agricole, et auprès des gouvernements, un aperçu des possibilités offertes et des difficultés présentées par la télédétection pour l’assurance indicielle, et à formuler des recommandations concernant les secteurs nécessitant des efforts et des investissements supplémentaires.

Le projet  a pu être mené grâce au financement de l’Agence française de développement et à la contribution supplémentaire de la Politique scientifique fédérale belge. Ce projet a été mis en oeuvre par le Mécanisme de gestion des risques climatiques (WRMF, Weather Risk Management Facility) du Fonds international de développement agricole (FIDA) et par le Programme alimentaire mondial (PAM). L’Institut flamand pour la recherche technologique (VITO) a apporté des contributions et un soutien importants tout au long du projet.

site de l'événement  -  English (en)

Author Coleman, E., Dick, W., Gilliams, S., Piccard, I., Rispoli, F., & Stoppa, A.
Publisher Fonds international de développement agricole - FIDA
Number of Pages 60
Primary Language French (fr)
Region / Country Global
Keywords Assurance indexée, Assurance agricole, Assurance climatique
Related Resources
EIT Climate-KIC and the future of the forestry sector Paper 2018

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In 2016, EIT Climate-KIC began to explore these questions, and the role that forest management practices could play in enhancing climate innovation. Between July 2016 and March 2017, it organised three stakeholder workshops, in France, Switzerland and Finland, to better understand the current state of the European forestry sector. In November 2016, it launched a call for a series of white papers to increase understanding of the most pressing environmental and economic challenges facing the sector, its partners’ current perspectives on these, and their visions for the future of the sector.

The inputs developed and submitted by these partners together with the work developed by the community in the context of current Climate-KIC innovation projects were used to inform this document. This process also identified some major opportunities for EIT Climate-KIC’s innovation community, and underpins the strategy behind its flagship forestry programme, which will be launched later in 2018.

This document synthesises our sectoral analysis and summarises key visions and challenges identified from our partners’ own white papers and project activities. From a methodological point of view, EIT Climate-KIC wishes to clarify that challenges and case studies related to deforestation in tropical countries have not been included; these themes fall under the remit of a specific sub-group of partners.

Supporting the Momentum of Paris: A Systems Approach to Accelerating Climate Finance Paper 2018

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Systems thinking approaches provide the potential to identify and measure how international public climate finance actors can interact:

  • With each other, given their own perspectives and constraints on what they can do, their future direction of travel, and direction of their peers.
  • With developing country financial systems, given emerging trends in green finance across the developing world, potentially unlocking new sources of finance.

    The systems approach frameworks developed in this project offer methods to enhance coordination and collaboration among actors both within the international public climate finance system, and during design of interventions within developing country contexts.

    The graphic overleaf provides an overview of needs and gaps drivers across developing countries, against the drivers of public finance actor perspectives.

1. While specific systems and needs are best evaluated on a country by country basis, short-ter- mism, growing risks and volatility are prevalent across developing country financial systems,impacting currency risk evaluation and potential public support for climate policies.

2. Access to finance, the costs of and suitability of current financial products, and lack of tools and methods to enact low carbon and climate resilient projects remain the key barriers to climate finance growth. Political and policy risks in the domestic environment are also cited as a key barrier to address in supporting private finance solutions.

3. The most prevalent instruments and solutions identified include blended or structured finance vehicles, utilising concessional finance; de-risking instruments such as guarantees or insurance; the provision of data and tools to manage uncertain risks; and policy support and technical assistance to reduce or manage political risks.

However, while such solutions are commonly called for, delivering them at scale require some of the major public finance actors in climate finance to adapt and change business models.

Author Padraig Oliver, Bella Tonkonogy, David Wang, Xueying Wang
Number of Pages 22 pp.
Primary Language English (en)
Region / Country Global
Keywords Climate Insurance
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ENSO Index-Based Insurance for Agricultural Protection in Southern Peru Article 2018

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 The article presents a demonstration of methodology and application for one specific crop in a department of southern Peru. The purpose of this product is to streamline the ability of decision makers to provide financial relief to affected farmers during, and perhaps before, drought; extending the lead-time of the index that is used to trigger product payouts produces results of similar skill to a product trained on concurrent conditions. Issues explored in this work include basis risk, initial endowment requirements, product longevity, and the potential crossover from index-based insurance to forecast-based financing. The ability of such products to mitigate losses during and after drought may be advantageous in Peru and other regions with notable interannual climate variability. 

Author Eric Mortensen and Paul Block
Number of Pages 15 pp.
Primary Language English (en)
Region / Country Global
Peru
Keywords index-based insurance; forecast-based financing; agricultural planning; drought response;
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Insurance of weather and climate-related disaster risk Paper 2017

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The study builds on the EU Adaptation Strategy (EC, 2013a) and the Green Paper on the insurance of natural and man-made disasters (EC, 2013b), and addresses the objective of encouraging the use of insurance to manage weather and climate-related disaster risk. More specifically, the study supports the EU Adaptation Strategy through: (1) Increasing the knowledge base by collecting and providing information with regards to insurance coverage, mechanisms and cost-effectiveness, including preventive capacity; (2) Increasing awareness, promoting further action and defining the next steps in insuring extreme weather events​

Author Ramboll; IVM
Publisher European Commission
Primary Language English (en)
Region / Country Europe
Keywords bad weather, damage, environmental risk prevention, Insurance, man-made disaster, Natural Disaster, report
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Insuring well-being? buyer's remorse and peace of mind effects from insurance 2017

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This paper estimates the causal effects of index insurance coverage on subjective well-being among livestock herders in southern Ethiopia. The randomization of incentives to purchase index-based livestock insurance and three rounds of panel data are exploited to separately identify ex ante welfare gains from insurance that reduces risk exposure and ex post buyer's remorse effects that may arise after the resolution of uncertainty. Insurance coverage currently in force generates subjective well-being gains that are significantly higher than the buyer's remorse effect of an insurance that lapsed without paying out. Given the temporal correlation in insurance purchase propensity, failure to control for potential buyer's remorse effects can bias downward estimates of welfare gains from current insurance coverage.

Author Hirfrfot Kibrom Tafere; Barrett Christopher B.; Lentz Erin; Ayana Birhanu T.
Publisher World Bank Group
Washington, D.C
Number of Pages 49 pp.
Volume / Issue# 1
Primary Language English (en)
Region / Country Africa, Northern Africa
Ethiopia
Keywords Index-Based Insurance
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Regulatory Impact Assessments: Microinsurance Regulations in Peru and the Philippines Report 2017

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Insurance supervisors in emerging and developing markets have been developing policy, regulatory and supervisory approaches to foster markets for inclusive insurance for more than a decade. With the support and collaboration of other government authorities, such as their central banks, and development cooperation agencies, several markets have undergone transformative changes. Looking back, what has been the impact of these measures? What can other supervisors learn by comparing the experience of countries that have already been through the process? The Access to Insurance Initiative (A2ii) and the International Labour Organization (ILO) through its Impact Insurance Facility (IIF) have commissioned this study to assess the impact of microinsurance regulatory frameworks on developing inclusive insurance markets by way of a Regulatory Impact Assessment (RIA). The Philippines and Peru have been selected as case studies for two reasons. The first is, being early pioneers of measures to develop microinsurance via supportive policy and regulatory approaches, the two countries have among the longest experience with microinsurance regulations and thus offer a wealth of observed experience and rich lessons. Second, both countries took distinctively unique approaches based on their respective policy objectives and local market contexts, and the strategies adopted, thus enabling insights to be drawn from meaningful comparison of the measures each supervisor took. 

Workshop on Development of Aquaculture Insurance System for Small-Scale Farmers Report 2017 English (en)

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The workshop aimed to identify policy and technical measures that would make insurance available and accessible to small-scale aquaculture farmers. Three commissioned papers and seven supplementary papers and presentations informed the discussions, which led to a set of recommendations addressed to the participating countries as well as to other developing countries and a specific follow-up activity in Thailand with a possible FAO collaborative assistance.

The workshop was a collaboration between FAO and Kasetsart University (KU) in Bangkok implemented through a Letter of Agreement with the Center for Applied Economics Research, KU. It was held at the Faculty of Economics of which comprised two days of meetings. The first, on 20 September 2016, had a regional scope that discussed the experiences in and challenges to aquaculture insurance. The participants were experts from China, the Philippines, Singapore, Thailand and Viet Nam. The second workshop, on 21 September 2016, focused on the prospects of a viable and sustainable aquaculture insurance for the shrimp aquaculture industry of Thailand. The deliberations were informed by a field study of the demand for insurance by the sector. It was joined by officers and members of shrimp farmers’ cooperatives from five provinces of Thailand and the participants of the first workshop.

The workshop attained its objectives. It also facilitated these results: (i) made farmers, farmer advisers, researchers and academics more familiar with the insurance business and technical requirements of insurers, (ii) made insurers become more familiar with the circumstances and the needs of aquaculture farmers, (iii) confirmed that insurers continue to view aquaculture as a high-risk industry, (iv) highlighted the need to incorporate risk assessment and management in the development of better farm management practices in line with the requirements of insurance, and (v) confirmed the usefulness of bundling credit and insurance in the development of institutional services for farmers.

Report of the Workshop on Development of Aquaculture Insurance System for Small-Scale Farmers  -  English (en)

Author Food and Agriculture Organization of the United Nations (FAO)
Publisher Food and Agriculture Organization of the United Nations (FAO)
Rome, Italy
Number of Pages 51 pp.
Primary Language English (en)
Region / Country Global
Keywords Insurance, aquaculture, credit, aquaculture insurance
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Index-Based Insurance in Developing Countries: Rational Neglect? Paper 2017

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Microinsurance adoption in developing countries is low, despite its potential to foster economic growth. Recent research is not able to explain the low take-up rates within the neoclassical framework. In this paper, Author suggest rational explanations of farmers’ low take-up rates of index-based weather insurance by setting up a stochastic model within an expected utility framework. This approach stands in contrast to previous research that is mainly concerned about convincing farmers of the insurance product without taking into account the (objective) failure of the contract for many farmers. 

Author Daniel Würtenberger
Number of Pages 35 pp.
Primary Language English (en)
Region / Country Global
Keywords weather insurace; basis risk; microinsurance; developing countries; understanding of insurance products; trust in insurer
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The role of insurance in integrated disaster and climate risk management: evidence and lessons learned 2017 English (en)

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This paper on the role of insurance in integrated disaster and climate risk management published by the GIZ presents an empirical evidence related to when and how insurance can contribute to disaster and climate risk management. Aspects explored include the contribution of insurance to relating to, or even creating the macro-conditions for, resilience to disasters in terms of public finance, economic growth and good governance; the contribution of insurance to risk prevention, preparedness, response and recovery; and the factors that influence the provision of insurance by companies and governments, as well as the uptake of insurance by governments and households. Findings and conclusions from the empirical review are provided, and links are drawn with the key concepts of risk layering and Integrated Climate Risk Management. 

View Resource  -  English (en)

L’Afrique subsaharienne, nouvelle frontière des assureurs ? Document 2016 French (fr)

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Depuis quelques années, l’Afrique suscite l’intérêt grandissant des acteurs de l’assurance, qui ont investi le secteur, mais non sans difficultés. À l’échelle mondiale, l’Afrique ne représente que 1,5 % du marché global, alors qu’elle pèse pour 13 % de la population mondiale.

Plusieurs facteurs expliquent cette situation. Tout d’abord, la faiblesse des revenus moyens des particuliers. Avant de payer des cotisations d’assurance, il faut pouvoir manger, se loger, etc. Autant de priorités qui relèguent l’assurance dans la catégorie des dépenses « somptuaires » et donnent à beaucoup l’impression que les assurances obligatoires sont des taxes supplémentaires. La perception et la confiance dans les assureurs en pâtissent. À cela s’ajoutent un taux de bancarisation encore faible en Afrique subsaharienne et la vivacité des réseaux de solidarité traditionnelle. Malgré ses freins, l’assurance dispose d’un potentiel de développement important sur le continent, à condition que les acteurs privés adaptent leurs offres et leurs outils de distribution aux besoins et aux capacités contributives des Africains.

Ce nouveau numéro de Secteur Privé & Développement propose d’explorer les opportunités et les contraintes de l’assurance en Afrique, en présentant les analyses de plusieurs parties prenantes du secteur (assureurs, chercheurs, bailleurs, etc.).

Fondateur du groupe Activa, Richard Lowe nous offre une vue d’ensemble de l’assurance en Afrique (pages 6-8), tandis que Pathé Dione, fondateur du groupe Sunu, apporte lui un éclairage plus spécifique sur les marchés d’Afrique francophone (pages 15-17). Le secteur de l’assurance a le potentiel pour participer au développement de l’Afrique, estiment Garance Wattez-Richard et Amélie de Montchalin du groupe AXA (pages 9-12) : il contribue à stimuler la croissance, à accroitre la résilience des économies locales face aux évènements extrêmes et à favoriser la solidarité entre les individus. À cela s’ajoute sa capacité, pour l’instant limitée, à canaliser l’épargne des ménages et à investir à long terme dans les entreprises et les projets d’infrastructure en faveur du développement local, comme l’explique Frédéric Baccelli, directeur général d’Allianz Africa (pages 13-14).

L’essor de l’assurance en Afrique se fera notamment via la microassurance destinée aux actifs de l’économie informelle, et ce malgré les nombreux défis à relever comme le montrent Eneida del Hierro et Aurore Lambert de l’AFD (pages 30-34), ainsi que les expériences conduites en la matière au Maroc, en Inde, en Tanzanie ou encore au Mexique (pages 35-38). Pour les petits exploitants agricoles du continent, la mise en place de systèmes d’assurance, dite indicielle, qui permet de faciliter l’indemnisation en cas de mauvais rendement ou d’aléas climatiques, constitue une piste prometteuse (pages 18-21 et 26-29).

S’ils veulent séduire l’Afrique, les assureurs sont au défi d’inventer de nouvelles formes de distribution moins coûteuses. La téléphonie mobile apparait comme un vecteur prometteur, nous explique Frédéric Bouchet, du groupe de courtage d’assurances et de réassurances Gras Savoye (pages 39-41)

Lien vers la publication  -  French (fr)

The State of Microinsurance 2016 Document 2016 English (en)

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This second edition of the Microinsurance Network's annual magazine presents the insights and views of 22 experts in the field with regards to innovative developments in product design, distribution and regulation. Topics discussed include behavioural economics in microinsurance, the contribution of insurance to capital market development, and the possibility of benchmarking microinsurance based on key performance indicators. For the first time, the magazine includes a debate which focuses on the role of private health insurance in achieving universal health coverage. With regards to agriculture insurance, one article features case studies demonstrating the concept of bundling with financial and non-financial services and another article focuses on non-climate risks affecting Sahelian livestock herders. Interviews were also conducted to capture valuable insights from Democrance, RisKnoT, BIMA, Swiss Re and MicroSave. Contributions were provided by a number of organisations supporting microinsurance including Cenfri, Inclusivity Solutions, MicroInsurance Centre, Abt Associates, the UK Royal Institute of International Affairs, Access to Insurance Initiative, MicroEnsure, Acting for Life and the ILO’s Impact Insurance Facility among others.

The State of Microinsurance 2016  -  English (en)

The State of the Microinsurance (SoM) Newsletter 2016 English (en)

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The second issue feature some of the following topics: 

  • Breaking free to fund the growth frontier – the link between insurance and capital market development in Sub-Saharan Africa
  • Benchmarking in microinsurance
  • Implementation of regulatory and supervisory standards for access to insurance in Latin America and the Caribbean
  • Successful Mobile Operating Schemes- the MicroEnsure Experience
  • Index-insurance and non-climate-related risks for Sahelian herders
  • Building scale in agriculture insurance through bundling with financial and non-financial services
The State of Microinsurance  -  English (en)

The Landscape of Microinsurance in Sri Lanka 2016 Document 2016

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“The Landscape of Microinsurane in Sri Lanka”, carried out by the Microinsurance Network and Munich Re Foundation and based on 2013-2016 data. This study is part of a series of microinsurance landscape studies which feed into the World Map of Microinsurance, an initiative mapping the landscape of microinsurance worldwide. According to recent data, there are currently 2.6 billion SIM cards in use across Asia, highlighting the huge potential for growth for microinsurance through this channel. TSP policies across Asia offer coverage for life, personal accident (PA) and health (hospital cash). However, product innovation remains a challenge with most of the microinsurance products having similar features: The majority are voluntary, include loyalty aspects, and are paid through airtime. This new Landscape Study provides important new information on opportunities for and challenges faced by microinsurance in Sri Lanka. With around 7% microinsur­ance penetration in the country, there is still much scope for growth in reaching the low-income population.

Landscape of Microinsurance in Ghana 2015: supply and demand side report Report 2015

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Microinsurance is an important mechanism for managing uncertainties and vulnerabilities of low-income segments of the population. In Ghana, microinsurance industry development is being spearheaded by the National Insurance Commission (NIC) to expand the insurance market and facilitate improved access to and the usage of insurance services by MSMEs and low-income households. The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ), provides technical assistance to NIC and other key stakeholders in the insurance sector to achieve this objective. In pursuance of this, the NIC has introduced the Market Conduct (Microinsurance) Rules in order to guide the microinsurance segment of the insurance market. As a follow up to a 2012 survey, the NIC working with GIZ contracted MicroInsurance Centre (MIC) and CDC Consult Limited to conduct a Microinsurance Landscape Survey for 2014. The survey focused on both the supply and demand sides of the market. The supply side sought to throw more light on the status of the microinsurance sector in Ghana; solicit detailed feedback from the insurance industry on the current level of adoption of the Market Conduct (Microinsurance) Rules; identify examples of good practices in the microinsurance market and investigate their promotion. The demand side focused on assessing the current level of knowledge, attitude and perception of microinsurance clients.

The ILO’s Impact Insurance Facility - Annual Report 2014 Report 2015

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The ILO’s Impact Insurance Facility Annual Report 2014 highlights ILO’s achievements over the last year.

In 2014, ILO rebranded the activities to adopt a broader approach to enable insurance to fulfill its potential to achieve social and economic development objectives. Through three main initiatives: a) facilitating market development in select countries, b) supporting and learning from innovative insurance approaches, and c) by building the capacity of insurers and other stakeholders to be more impactful.

Microseguros agropecuarios y gestión integral de riesgos en Centroamérica y la República Dominicana Book 2015 Spanish (es)

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En Centroamérica y República Dominicana se han llevado a cabo diversos esfuerzos para promover los seguros y microseguros agropecuarios considerando la creación de leyes, la instauración de política pública y la implementación de facilidades para la adquisición por parte de los productores de bajos ingresos del área rural. En tal contexto, el documento analiza  los microseguros agropecuarios y la gestión integral de riesgos, las experiencias y lecciones de microseguros en economías en desarrollo, la necesidad los microseguros agropecuarios en Costa Rica, la factibilidad para desarrollar los microseguros agropecuarios en El Salvador, Honduras, Nicaragua y Panamá. Finalmente presenta conclusiones por país y factibilidad de los seguros y microseguros agropecuarios.

Microseguros agropecuarios y gestión integral de riesgos en Centroamérica y la República Dominicana: lineamientos estratégicos para su desarrollo y fortalecimiento  -  Spanish (es)

Author Iraheta, J. M. & Arroyo, J. M.
Publisher Comisión Económica para América Latina y el Caribe
Number of Pages 224
Primary Language Spanish (es)
Region / Country Global, Americas
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Remote Sensing for Index Insurance: findings and lessons so far Paper 2015

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Weather Risk Management Facility, a joint initiative between the International Fund for Agricultural Development and the World Food Programme, is implementing a project to evaluate the feasibility of remote sensing for index insurance to fill the critical gap of quality, long-term weather and yield data on-the-ground.

This publication gives an overview of the project and documents lessons so far after the first test season of developing and analysing remote sensing products for index insurance to accurately depict yield loss in smallholder farming due to weather and other perils, and be scalable in index insurance schemes.

The focus is Senegal, with outcomes intended for entire index insurance sector. Findings so far relate to the historical and 2013 crop season performance of each remote sensing methodology when assessed against on-the-ground yield and rainfall data, and cover lessons on: 

  1. Crop and area performance
  2. Design and calibration of indices
  3. Defining Unit Areas of Insurance
  4. Crop maps and masks

Following this test season, the project is continuing to develop, test and analyse the remote sensing methodologies for two more seasons, with an overall evaluation taking place in 2016, after which conclusions will be shared. 

Access to Insurance Initiative (A2ii) Annual Report Report 2015

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The A2ii team is proud to present its annual report for the reporting period October 2014 to September 2015.
Find out how the A2ii as implementation partner of the IAIS on inclusive insurance inspired and supported insurance supervisors during the last 12 months!
Learn more about inclusive insurance and the current regulatory landscape and how the A2ii worked with the IAIS in supporting implementation of the ICPs and supervisory capacity building at a regional level.

Responsible Mobile Insurance Paper 2015

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This GIZ discussion paper on “Responsible Mobile Insurance”  assesses new initiative in the field of mobile insurance through the lens of responsible finance to determine the risk and potential responsible practices. Responsible Finance has recently developed as a coordinated approach aimed at driving responsible practices in financial inclusion based on public and private sector interventions that encourage and assist financial services providers and their clients in improving their understanding and practices to create more transparent, inclusive, and equitable financial markets balanced in favour of all income groups. Mobile insurance has huge potential due to the high mobile penetration and the growing mobile money industry and is driven by a number of factors and stakeholders.

Author Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Publisher Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Eschborn, Germany
Number of Pages 28 pp.
Primary Language English (en)
Region / Country Global
Keywords responsible finance, Insurance, mobile insurance
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Scaling Up Index Insurance for Smallholder Farmers: Recent Evidence and Insights Report 2015 English (en)

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The new CGAP report on “Scaling Up Index Insurance for Smallholder Farmers: Recent Evidence and Insights” that explores evidence from five case studies that have made significant progress in addressing the challenge of insuring poor smallholder farmers and pastoralists in the developing world. There are a few common features that appear within these case studies: i) explicitly targeting obstacles to improving farmer income; ii) integration of insurance with other development interventions; iii) giving farmers a voice in the design of products; iv) investing in local capacity; and v) investing in science-based index development. The purpose of this report is to inform the ongoing debate about the viability of scaling up index-based insurance for vulnerable smallholder farmers in the developing world  and it suggests the need to reassess arguments that lack of demand and practical implementation challenges prevent index-based insurance from being a useful tool to reduce rural poverty.

Scaling up index insurance for smallholder farmers  -  English (en)

Author Greatrex H, Hansen JW, Garvin S, Diro R, Blakeley S, Le Guen M, Rao KN, Osgood, DE.
Publisher CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS)
Copenhagen, Denmark
Number of Pages 32 pp.
Primary Language English (en)
Region / Country Global
India, Ethiopia, Senegal, Mongolia, Kenya
Keywords Index-Based Insurance, Insurance, Index Insurance
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The Landscape of Microinsurance in Africa 2015 Document 2015 English (en)

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The study provides an in depth analysis of the evolution of microinsurance in the African region in terms of products, delivery channels, regulations and profitability indicators to the industry, building upon the data released in the African Landscape Briefing Note in November last year.

 

The landscape measured a 63% premium growth, on an aggregate comparative basis, since the last landscape study in 2011, with 61.8 m people covered by at least one microinsurance policy by the end of 2014, compared to 44.4 m people in 2011. A total coverage ratio of 5.4% of the total population was measured across the African region, up from 4.4% in 2011. This is comparable to the coverage ratio in Asia and Oceania at 4.3% (2012), though still below that in the Latin America and Caribbean region at 7.9% (2013), as shown in the World Map of Microinsurance (WMM) which incorporated data from the Africa landscape and previous studies.

 

About the World Map of Microinsurance

The World Map of Microinsurance (WMM) is an interactive map that enables insurers and microinsurance practitioners to gain a birds-eye view on the landscape of microinsurance worldwide, and to search and extract sector-specific data by region to gain insights into trends in microinsurance, fostering better decision-making at an operational and policy level. A series of tri-annual regional landscape studies, including the current Landscape of Microinsurance Africa 2015, provide the data underpinning the map. worldmapofmicroinsurance.org

The Landscape of Microinsurance in Africa 2015  -  English (en)

Microseguros agropecuarios y gestión integral de riesgos en Centroamérica y la República Dominicana Book 2015 Spanish (es)

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El documento analiza las dificultades asociadas a la oferta de seguros y microseguros agropecuarios de Centroamérica y la República Dominicana, región en la cual el reto para instrumentar mecanismos de aseguramiento parte desde la creación de leyes específicas, pasando por instauración de una institución pública responsable de los seguros y microseguros, hasta la implementación de facilidades para la adquisición por parte de los productores de bajos ingresos en la zona rural. 

Microseguros agropecuarios y gestión integral de riesgos en Centroamérica y la República Dominicana  -  Spanish (es)

Author Iraheta, José M., Arroyo, José M.
Publisher Comisión Económica para América Latina y el Caribe
Number of Pages 224
Primary Language Spanish (es)
Region / Country Global, Americas, Central America
Keywords Microseguros agropecuarios, Gestión del riesgo
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Exploring new frontiers: the potential of impact investments in microinsurance Paper 2014 English (en)

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This document serves as a synthesis of high level findings from a review of the landscape of microinsurance investments and serves to identify key opportunities and challenges. The document also seeks to provide key recommendations and the action, steps and support mechanisms required to catalyse investments in microinsurance.

Paper  -  English (en)

Author Jeremy Leach, Sandisiwe Ncube, and Anand Menon
Publisher Microinsurance network
Number of Pages 50 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Agriculture, Microinsurance, and Rural Development Paper 2014 English (en)

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This paper produced by the Microinsurance Network's Agriculture Working Group analyses the role of agricultural microinsurance as a rural development tool, exploring how products such as index-based crop insurance could address the constraints smallholders typically face. The paper also looks at:

·         Challenges with parametric insurance and how they can be overcome

·         Mapping constraints that affect smallholders and potential intervention strategies

·         How effective agricultural microinsurance can help smallholders stabilise their income and increase production

·         Recommendations to develop holistic agriculture insurance models

Paper  -  English (en)

Author Silvia Müller, Gaby Ramm, Roland Steinmann
Publisher Microinsurance Network
Luxembourg
Number of Pages 44 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Genèse et essor de la micro-assurance agricole Document 2014 French (fr)

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Les efforts visant à améliorer l’accès des agriculteurs aux produits d’assurance agricole n’ont jamais été aussi intensifs. Les préoccupations de sécurité alimentaire – en situation de demande croissante, de volatilité des prix des produits de base et de changement climatique – renforcent l’intérêt pour l’assurance agricole, ont fait l’objet de plusieurs rapports officiels et officieux et ont engendré plusieurs projets pilotes conduits par des organismes privés agissant seuls ou dans le cadre de partenariats publics-privés. Ces préoccupations trouvent un écho dans le Plan d’action sur la volatilité des prix alimentaires et sur l’agriculture, publié par le G20 de Paris en juin 2011 (voir l’Annexe D – Initiatives de coordination). Les nouvelles technologies participent au progrès et ouvrent de nouvelles perspectives. Dans le monde émergent, les volumes de primes d’assurance agricole augmentent fortement dans quelques pays – Inde, Chine, Mexique, Brésil – grâce à des soutiens publics forts. Ainsi, le nombre de primes souscrites dans l’agriculture atteint des niveaux inégalés. En l’absence de soutien public généreux, par contre, le développement des marchés est lent. En outre, aucun produit indiciel pour petits exploitants agricoles n’a encore été commercialisé avec succès en dehors de l’Inde.

L’intérêt pour l’assurance agricole procède de son impact potentiel sur la pérennisation des exploitations agricoles. En effet, l’assurance permet aux agriculteurs, malgré une mauvaise récolte, de conserver leurs outils de production (actifs) et leur capacité à réinvestir pour préparer la prochaine campagne. On attend aussi de l’assurance qu’elle ouvre l’accès au marché du crédit et favorise les prêts agricoles, ce qui peut être porteur d’investissements complémentaires dans la productivité. La stabilisation du pouvoir d’achat des agriculteurs peut aussi, à son tour, stimuler l’activité économique non agricole en zone rurale. L’assurance agricole ne peut toutefois être considérée comme un substitut à l’adaptation au changement climatique qui exigera une gamme complète d’interventions.

Le présent document offre un panorama des évolutions et débats actuels entourant le secteur de l’assurance agricole sur les marchés émergents avec un accent particulier sur les enjeux spécifiques des produits d’assurance indiciels.

Le rapport commence par une mise en contexte décrivant comment l’assurance agricole est apparue en Europe et en Amérique du Nord avant de conquérir les autres continents, puis aborde l’état actuel des marchés agricoles. Des évolutions récentes ont vu se développer les systèmes d’assurance indicielle qui sont traités dans le chapitre suivant, lui-même suivi d’une réflexion sur les acteurs impliqués dans l’offre de ces polices d’assurance assortie d’une synthèse de la littérature récente abordant cette thématique et mettant en exergue ce que l’on peut apprendre concernant la valeur de ces produits. Quatre études de cas – Brésil, Maroc, Sénégal et Chine – décrivent les exemples de divers pays et de leurs démarches d’instauration de l’assurance agricole en se concentrant sur la proposition de valeur de chaque système. 

Lien vers la publication  -  French (fr)

Author Microinsurance Network
Publisher Microinsurance Network
Number of Pages 88
Primary Language French (fr)
Region / Country Global, Africa, Americas, Asia, Europe, Oceania
Brazil, Morocco, Senegal, China
Keywords Agricultural Microinsurance, Index-Based Insurance
Related Resources
Index based livestock insurance (IBLI) Multimedia 2013 English (en)

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This is a video of a mobile-based platform to help livestock farmers in Kenya purchase livestock insurance and acquire value added services.

Index based livestock insurance (IBLI)  -  English (en)



Insuring against the Weather Technical Note 2013 English (en)

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Weather risk remains a major challenge to farming in poor countries that face frequent droughts. Recent evidence on index- based weather insurance points to low take-up rates largely due to basis risk (i.e. residual risk left uninsured by the index). Us- ing randomized control trials, we study to what extent traditional groups can be utilized to mitigate basis risk by retailing insur- ance through these groups. We find that selling insurance through iddirs, with pre-defined sharing rules, increases take-up— suggesting that groups are better placed to reduce basis risk. We also find that insurance strengthens existing risk-sharing be- havior within groups, for example, by improving access to loans from the iddir to cover crop losses and improving perceived ability to finance emergencies. Insurance has also improved household welfare in the short term considered in this study, albeit to a limited extent.

Research Note  -  English (en)

Author Guush Berhane, Daniel Clarke, Stefan Dercon, Ruth Vargas Hill, and Alemayehu Seyoum Taffesse
Number of Pages 2 pp.
Primary Language English (en)
Region / Country Global
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Beyond Slogans: Good Practices in Promoting Microinsurance Products Paper 2013 English (en)

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This paper provides microinsurance providers and their distribution partners with a ten-step promotional planning model on developing and implementing promotional campaigns for microinsurance products. These steps can help overcome barriers such as lack of trust in providers, low financial and insurance literacy as well as improve the results in microinsurance programs.

Paper  -  English (en)

Author Lee, N.R.; Solana, J.M.
Publisher ILO and the Munich Re Foundation
Number of Pages 59 pp.
Volume / Issue# 22
Primary Language English (en)
Region / Country Global
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Protecting the poor: A microinsurance compendium - Volume II Book 2012

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Published by the ILO and the Munich Re Foundation, the second volume of the Microinsurance Compendium examines the recent developments and achievements of the microinsurance sector by bringing together the latest thinking of leading academics, actuaries, and insurance and development professionals in the microinsurance field.

Since the publication of the first edition, the landscape of microinsurance has changed enormously. With almost 500 million people now covered by microinsurance, the book discusses the main trends and evolution of the sector while also considering where it currently stands from a global point of view. The focus of the book is on how insurance products and services can successfully tackle the needs of low-income populations and help to reduce their vulnerability.

Essential reading for insurance professionals, practitioners and anyone involved with offering insurance services to low-income persons, the second volume covers many of the new challenges faced by stakeholders in the sector. These include the potential impact of microinsurance, consumer education and client value, designing products for specific target groups, distribution and intermediation, price with limited data, conducive regulations and appropriate consumer protection, and innovations in technology.

We would like to highlight part 4 of the book that covers small holder farmer insurance and livestock insurance.

Author Craig Churchill and Michal Matul
Publisher ILO and the Munich Re Foundation
Number of Pages 36 pp.
Volume / Issue# II volume
Primary Language English (en)
Region / Country Global
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Pathways Towards Greater Impact: Better Microinsurance Models, Products and Processes for MFIs Paper 2012 English (en)

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This paper provides a comprehensive review of the challenges facing MFIs that provide insurance to low-income persons and microenterprises, as well as their successes, with a focus on three topics: (1) the evolution of products, (2) the range of institutional options, and (3) improving business processes.

Emerging from this review are ten key recommendations for MFIs involved in microinsurance:

  1. Understand market needs and preferences
  2. Prioritize savings
  3. Make mandatory cover valuable
  4. Proactively develop the product menu
  5. Improve claims processing
  6. Apply holistic risk management
  7. Create a demonstration effect
  8. Structure for success
  9. Build insurance capacity
  10. Monitor performance
Paper  -  English (en)

Author Craig Churchill, Aparna Dalal, Josh Ling
Publisher International Labour Organization (ILO)
Number of Pages 61 pp.
Primary Language English (en)
Region / Country Global
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Briefing Note: The Landscape of Microinsurance in Africa 2012 Brief 2012

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This briefing note, officially launched at the 8th International Microinsurance Conference in Dar es Salaam, Tanzania, on November 8, 2012, presents the summary of the findings of the upcoming Landscape of Microinsurance in Africa 2012 publication. The study provides up-to-date data on micro-insurance providers, products, distribution channels, and market trends for 39 African countries and includes a high level overview of regulatory developments.

The study has accomplished several objectives: the description of recent trends in microinsurance on the continent; the identification of the gaps in access to microinsurance, and the identification of key bottlenecks to the development of a viable and sustainable micro-insurance sector in Africa.

The most striking finding is that microinsurance coverage in Africa has grown tremendously over the past few years. The prior 2010 Africa Landscape study identified a total of 14.7 million lives and properties covered by microinsurance in 32 countries. The current study identified 44.4 million lives and properties covered in 39 countries, a growth of over 300% between 2008 and 2011.

Although microinsurance coverage has dramatically increased, the market described in 2008 has not significantly changed in that the vast majority of Africans with insurance coverage, are covered by life insurance. Other insurance products related to health, agriculture, accidents and property, are not as common on the continent, which is inconsistent with demand especially for health insurance. This finding should drive the relevant stakeholders to take steps towards addressing this shortcoming.

Author Michael J. McCord, Roland Steinmann, Molly Ingram
Publisher MFW4A/GIZ, Munich Re Foundation in partnership with AfDB, Microinsurance Network, Microinsurance Innovation Facilty/ILO
Number of Pages 11 pp.
Primary Language English (en)
Region / Country Global
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Process mapping for microinsurance operations Toolkit 2012 English (en)

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IFAD has developed the tool kit “Process mapping for microinsurance operations” to better understand and improve business processes and client value. This manual presents a ‘process mapping’ technique that can support institutions in self-analysis by assisting them in understanding, developing and improving business processes. The toolkit describes how a process map can be drawn, analyzed and adapted for the microinsurance sector, as a complement to the above mentioned document. This manual was specifically developed as a suplement to Microinsurance product development for microfinance providers.

Process mapping for microinsurance operations  -  English (en)

Author Roland Steinmann
Publisher IFAD
Rome, Italy
Number of Pages 64 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Establishing an Index Insurance Trigger for Crop Loss in Northern Ghana Paper 2011

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This study analyzes the relationships between rainfall per crop gestation period (planting – harvesting) and crop yields and study the likelihood of crop yield losses. It makes recommendations on how this information could be used to develop a trigger for index insurance to help mitigate the financial risks to farmers and lenders who make loans to farmers in Ghana. The focus of this paper is on rainfall and crop yield and explores the potential for a drought loss insurance index trigger. This study concludes by describing limitations and challenges that must be overcome in order to develop such risk management tools and by describing the potential for crop loss index insurance based on area crop yield in northern Ghana.

Author The Katie School of Insurance, Illinois State University
Publisher The Katie School of Insurance, Illinois State University
Number of Pages 27 pp.
Primary Language English (en)
Region / Country Global
Ghana
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State of Knowledge Report - Market Development for Weather Index Insurance Key Considerations for Sustainability and Scale Up Paper 2011

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State  of  Knowledge  Reports  (SKRs)   focuses  on  developing  markets  for weather  index  insurance.    

Three  general  recommendations  emerge  from  this  SKR  and  the  preceding  reports  in  this  series.    

1. From  the  outset,  projects  supporting  index  insurance  must  formulate  an  evaluation  plan   related  to  targeted  development  objectives.  When  derived  from  a  clearly  defined  causal   theory  of  change,  evaluation  strategies  can  aid  investment  and  expansion  decisions.  

2. Rather  than  providing  premium  subsidies,  donor  and  government  funds  should  be  used  to   invest  in  building  local  capacity  and  to  establish  the  proper  institutional  frameworks  that  can   support  the  development  and  growth  of  index  insurance  markets  in  lower  income  countries.  

3. To  address  challenges  in  the  market  development  process,  product  design  should  focus  on:  products  for  risk  aggregators; Insuring  against  the  broader  economic  consequences  of  weather  risk,  not  just  direct   losses;  Insuring  against  low-­‐frequency,  catastrophic  risks;  and   c. Reducing  costs  and  adding  value  through  innovative  design  and  delivery  features.

Author Anne Murphy, Barry Barnett, Nadezda Nikolova, Jason Hartell, Jerry Skees, and Richard Carpenter
Publisher GlobalAgRisk, Inc.
Number of Pages 99 pp.
Primary Language English (en)
Region / Country Global
Related Resources
The Potential for Scale and Sustainability in Weather Index Insurance Report 2010

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Weather index-based insurance is a financial product linked to an index highly correlated to local yields. Indemnifications are triggered by pre-specified patterns of the index, as opposed to actual yields, reducing the occurrence of moral hazard and adverse selection and eliminating the need for in-field assessments. In addition, because the insurance product is based on an independently verifiable index, it can also be reinsured, thus allowing insurance companies to efficiently transfer part of their risk to international markets.

The Weather Risk Management Facility, a joint undertaking of IFAD and WFP, reviewed a range of recent experiences with index insurance programmes around the world, analysing the key actors, features of the products, and their successes and challenges. These pilot programmes have demonstrated the great potential of index insurance as a risk-management tool. They suggest that index insurance could not only provide an additional effective, market-mediated solution to promote agricultural development, but it could also make disaster relief more effective.

Author P. Hazell, J. Anderson, N. Balzer, A. Hastrup Clemmensen, U. Hess and F. Rispoli
Publisher IFAD
Number of Pages 153 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Islamic Business Contracts and Microfinance - A case of Mudaraba Paper 2010

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Islamic world is enormous with approximately 1.2 billion people across different countries. Poverty is rampant and widespread across Islamic world. Access to finance is very low based on their religious beliefs. This is a huge population under poverty and needs immediate and significant consideration to achieve the goal of making poverty history by 2015 as pledged in Millennium development goals.

These poor Muslim micro entrepreneurs need and demand access to financial services which do not compromise their religious beliefs of interest prohibition. Their demand can be met by designing financial products which are compatible with norms of Islamic finance which are based on prohibition of interest, avoidance from Gharar, Halal or permissible use of funds and non exploitation.

Islamic alternative to interest-based conventional loan is partnership based, trade based or lease-based credit that permits the ownership and/or use of commodities or physical assets needed for productive enterprise. Partnership based modes work on profit and loss sharing and there exists a mutual agreement between financier and micro entrepreneur for a specific business. Combination of business contracts in this category includes Mudaraba, Musharka and diminishing Musharka. Our current write up is focused only on Mudaraba.

Author Azhar Nadeem
Number of Pages 16 pp.
Primary Language English (en)
Region / Country Global, Africa, Northern Africa, Western Africa
Related Resources
The Potential for Scale and Sustainability in Weather Index Insurance Report 2010

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Depuis le début des années 2000, un nombre croissant de programmes pilotes ont testé un outil innovant en matière de gestion du risque covariant dans le secteur agricole: la microassurance indicielle.

L'assurance basée sur un indice climatique est un produit financier lié à un indice présentant une forte corrélation avec les rendements locaux. Les indemnisations sont déclenchées par des tendances spécifiques de l'indice convenues, et non par les rendements effectifs, ce qui a pour conséquence de réduire le risque d'aléa moral et d'antisélection, tout en éliminant la nécessité de procéder à des évaluations sur le terrain.

En outre, le produit d`assurance étant basé sur un indice vérifiable de façon indépendante, il peut également être réassuré, ce qui permet aux compagnies d'assurance de transférer efficacement une partie du risque aux marchés internationaux.

Author P. Hazell, J. Anderson, N. Balzer, A. Hastrup Clemmensen, U. Hess and F. Rispoli
Publisher IFAD
Rome, Italy
Number of Pages 156 pp.
Primary Language English (en)
Region / Country Global
Related Resources
The landscape of microinsurance in Africa Article 2009 English (en)

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Microinsurance is growing and expanding throughout Africa. Led by the ILO's Microinsurance Innovation Facility and the MicroInsurance Centre, this study identified over fourteen million low-income people in Africa who were covered by microinsurance at the end of 2008. The outreach almost doubled over the last 4 years. Even with such growth, there are clearly significant gaps. Substantial parts of the continent remain almost barren of microinsurance. Health, agriculture and property covers, all significantly in need by the low-income market, are evident as a mere fraction of life insurance coverage.

This study provides a detailed picture of microinsurance in Africa and discusses challenges in the years to come in order to facilitate broader, high-quality expansion.

ilo - microinsurance innovation facility  -  English (en)

Author M. Matul; M. McCord; C. Phily; J. Harms
Publisher International Labour Organisation
Number of Pages 8 pp.
Primary Language English (en)
Region / Country Global, Africa, Eastern and Central Africa, Northern Africa, Southern Africa, Western Africa
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Innovations In Insuring the Poor Paper 2009 English (en)

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This set of briefs considers how to increase the tools available to poor households to manage agricultural and health risks. The focus is how to develop insurance markets, along with other financial instruments such as credit, savings, and social protection policies. The series does not document the proven impact of insurance markets for the welfare of poor people; rather, it brings together briefs written by usinesspeople, policymakers, and researchers that document innovations, lessons learned, and areas of future work and action.

Innovations In Insuring the Poor  -  English (en)

Author Hill, R. and Torero, M.
Publisher IFPRI
Number of Pages 40 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Insurance against Losses from Natural Disasters in Developing Countries Paper 2009

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This paper examines the recent experience with insurance and other risk-financing instruments in developing countries in order to gain insights into their effectiveness in reducing economic insecurity. Insurance and other risk financing strategies are viewed as efforts to recover from negative income shocks through risk pooling and transfer. Specific examples of public-private insurance programs for households, business-firms, and governments are described, highlighting their limitations, especially in light of the post-Katrina experience in the United States. It examines arguments both in support of and in opposition to donor and public involvement in provision of subsidized insurance in developing countries.

Author Joanne Linnerooth-Bayer and Reinhard Mechler
Publisher DESA
Number of Pages 37 pp.
Volume / Issue# 85
Primary Language English (en)
Region / Country Global
Related Resources
Microinsurance that Works for Women: Making Microinsurance Programs Gender-Sensitive Paper 2009

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This paper is intended to generate discussion of a gendered approach to microinsurance. While insurance companies are beginning to design and deliver a variety of products to the poor, the paper focuses primarily on health and life insurance because these two risks typically are reported to exert significant financial pressure on poor women.

The authors explore how health and life microinsurance could be designed to more effectively respond to women’s needs, and offer practical advice to insurance companies for delivering such schemes. They conclude with a call to action for microfinance providers and insurance companies to make insurance more gender-sensitive, which will serve the dual mission of poverty alleviation and profitability.

Author A. Banthia ; S. Johnson ; M. McCord ; B. Mathews
Publisher ILO
Number of Pages 4 pp.
Primary Language English (en)
Region / Country Global
Bolivia, Colombia, India
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Islamic Microfinance: An Emerging Market Niche Technical Note 2008

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This Focus Note provides an overview of the current state of the Islamic microfinance sector and identifies possible challenges to its growth. It is intended as an introduction to Islamic microfinance primarily for the donor community and other potential entrants into the market.

Author Nimrah Karim, Michael Tarazi, and Xavier Reille
Publisher CGAP
Number of Pages 16 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Product Design and Insurance Risk Management Document 2007

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This note states that in a low income market, insurers should ascertain the need and demand for insurance, determine the risks to be insured, and devise insurance risk management processes to ensure the product's viability.

The note provides the following tips to microinsurance providers:

  • Product design should include: defining the target group; identifying insurable risks; determining key product features; establishing payment capabilities.
  • Affordability and product design preferences should be investigated together to provide real value to clients.
  • When determining eligibility, it is essential to consider: whether a product is designed for groups or individuals; whether it should be mandatory or voluntary; the approach that must be to adopted for covering high-risk persons.
  • Payment options could be short-term, long-term or renewable. Insurers prefer short-term policies while customers would prefer long-term commitment from the insurer.
  • Microinsurance benefits should be simple and the client should be able to claim the benefit easily.
  • Coverage can be in the form of basket coverage or family coverage.
  • Long-term clients who have not claimed any benefits could get value in terms of premium-back features, paid-up insurance, savings features, etc.
  • Insurers should avoid elective participation, diverse target populations and numerous product choices.
  • The amount of claims that must be processed should be controlled.

The note concludes by discussing the advantages of waiting periods and benefit schedules in avoiding the exclusion of high-risk clients.

Author CGAP
Number of Pages 2 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Weather and Agri Risk Solutions for Emerging Markets Document 2007

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This PowerPoint presentation from Swiss Re introduces the issues relating to weather risk management in agriculture in developing countries. The author first explains the impact of adverse weather on farmers and the whole agricultural value chain. She then describes the risk transfer products that are available and the typical product range that can be considered in agriculture.

The presentation goes on to look in detail at weather risk solutions and illustrates how a parametric weather index can be established for maize production. The remaining slides provide information on specific examples in Ethiopia, Malawi and India. Swiss Re has a dedicated team and resources for business development in emerging markets, so can offer technical assistance with product set up and structuring.

Author Ulardic, C.
Publisher Swiss Re
Number of Pages 13 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Developing Indexed-Based Insurance for Agriculture in Developing Countries Brief 2007

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This note focuses on one of the most pervasive production risks, weather, which impacts all aspects of the agricultural supply chain, particularly in economies based on rain-fed agriculture. Even with the introduction of new crop varieties, production technology such as irrigation, and new management practices that offer the potential to increase yields and improve resistance to weather perils, the majority of agriculture in developing countries remains highly susceptible to extreme, uncontrollable weather events that can severely impact both quality and yield of a crop.

As early as 1999, weather index-based insurance was being discussed in academic papers as a possible solution. In 2002, donors began to finance the piloting of these ideas. In particular, the World Bank’s Commodity Risk Management Group (CRMG) was allocated trust funds from the Swiss and the Dutch governments to pilot weather insurance for farmers to complement its price risk management work in commodity markets. Since then CRMG has been involved in many weather risk management technical assistance projects to commercial entities in the developing world, including India, Ukraine, Ethiopia, Malawi, Kenya, Tanzania, Thailand and Central America. Successes like the market growth of weather index insurance in India have had significant demonstration effects and have proven that weather risk management for farmers in the developing world is possible through insurance-type instruments. The CRMG has now begun to synthesize some best practices on how to create successful weather insurance schemes for farmers and how to make such initiatives sustainable and scalable, particularly in Africa.

The note explains the principles of this form of insurance and how a measurable index that can act as a proxy for risk is created. Boxed highlights explain how the product is priced and the seven steps that are required to develop a weather insurance pilot. The authors note that even if it is technically feasible to develop index-based weather risk management products, the operational challenges of reaching end users can be insurmountable for the actual implementation of a program. Attempts to integrate risk management practices into organizations that have problems such as poor communications infrastructure, institutional instability, underdeveloped marketing and financial skills, and weak managerial and decision-making authority, are likely to be ineffective and inefficient. The success of a weather insurance pilot also critically depends on the relationship the farmer has with the institution offering the insurance. The stronger and more trusted this relationship, the easier it will be to educate farmers about new risk management products and their limitations, and to deliver these services efficiently. Engaging local regulators and assisting them in the design of general insurance contractual conditions for these new index-based products is another key component of building a successful program.

This brief provides a quick introduction to the subject of weather index insurance and makes it clear that it is not a simple task to develop and introduce such products. The authors conclude that without the development of thorough training material that can be deployed and taken up locally, and the availability of funding to strengthen National Meteorological Services and their weather observing network, future growth of the market for index-based products will be limited.

Author Bryla, E.; Sryoka, J.
Publisher UN Department of Economic and Social Affairs
Number of Pages 8 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Introducing Islamic Banks into Conventional Banking Systems Paper 2007

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The paper focuses on the process by which Islamic retail banking is implanted in traditional financial systems. Drawing from the experience of several countries which have introduced Islamic banking over a period of time, the paper delineates the main phases of the process, with the intention of underscoring the main challenges faced by supervisors and practitioners at each stage. It also discusses some of the main elements required to build a supporting financial infrastructure that conforms to Islamic principles.

The sequence of steps to introduce Islamic banks that is discussed below should not be seen as a rigid template from which countries may not deviate. Such a rigid scheme would hardly be realistic, as countries’ specific circumstances will vary substantially in practice. Instead, the goal is simply to discuss a series of stepping stones in the road to introducing Islamic banks, while simultaneously flagging some of the main issues that, sooner or later, are likely to arise as this industry develops. In this sense, the stages below should not be viewed as strictly sequential, but rather as overlapping layers of the same process.

The paper is structured as follows: Section II discusses some preliminaries with which the authorities should be familiar before introducing Islamic banks; Section III explains the different phases in the development of Islamic banking; Section IV discusses the role that the supervisory authority should play in this process; Section V explains the different elements that are needed to build a supporting Islamic financial infrastructure; finally, Section VI concludes.

Author Juan Solé
Publisher International Monenary Fund (IMF)
Number of Pages 28 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Assessing Opportunities for Agricultural Insurance and Risk Coping Strategies Report 2007

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Managing agricultural risks and improving the well-being of rural populations are key components of Vietnam’s agricultural development strategy. This report includes seven chapters, four annexes, and several case studies. Chapter 1 introduces the purpose, methodology, sampling strategy, survey locations, conceptual framework that guided the research, and the economic status and strategies of surveyed households. Chapter 2 describes the agricultural risks and their impacts on farm households. Chapter 3 and 4 review the strategies that farm households use to cope with agricultural risks. Chapter 5 presents the case study of an active semi-formal livestock insurance program in North Vietnam. Chapter 6 presents preliminary conclusions about the opportunities for agricultural insurance in Vietnam and describes the results of the Product Concept Test Survey.

Author Dao Van Hung
Publisher Microfinance Opportunities
Number of Pages 80 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Plenary 6 - Evolving models for managing agricultural risks in India Document 2007

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During the Rural Finance Research conference, Dr Sankar Datta made a brief presentation to participants in a plenary session telling them how BASIX - a livelihood promotion and financial service provider in India - developed and introduced weather index insurance as a product for their clients.

A more detailed account of the process is provided in the attached paper written by Mr Gunaranjan.

Author Datta, S.; Gunaranjan
Primary Language English (en)
Region / Country Global
India
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Patterns of Rainfall Insurance Participation in Rural India Paper 2007

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This paper studies in detail a particular rainfall insurance product developed by the insurance firm ICICI Lombard1, which has been offered in recent years to smallholder farmers in the Andhra Pradesh region of southern India. The product provides a return based on rainfall during three separate phases of the Kharif, or monsoon season, and is inexpensive enough to be accessible to farmers of modest income (the cost for one policy covering all three phases of the Kharif is around Rs 200-300, equivalent to $5-6US). The product is sold to farmers by BASIX, a microfinance institution, and rainfall risk is underwritten by ICICI Lombard.

The paper is organised as follows:

  • Section 2 discusses the costs and benefits of index insurance.
  • Section 3 describes the contract features of rainfall insurance product, and related institutional details.
  • Section 4 discusses theoretical literature about the determinants of insurance participation and states the hypotheses to be tested.
  • Section 5 discusses the survey that was conducted and presents summary statistics.
  • Section 6 presents the empirical results on the determinants of insurance participation.
  • Section 7 concludes and discusses future research directions.

The study's ‘benchmark’ model of insurance participation hypothesised that in a simple setting without asymmetric information, a household’s willingness-to-pay for a given insurance contract will (i) increase with the household’s risk aversion, (ii) increase with the expected payout on the insurance, (iii) increase with the size of the insured risk, and (iv) decrease with basis risk (i.e. the potential mismatch between insurance payouts and actual losses which is particularly significant with index insurance).

The authors found some evidence consistent with the basis risk prediction; namely households who planted a large proportion of castor and groundnut, the two crops insured under the program were more likely to purchase insurance. They also found that take-up rates were higher amongst wealthy households, and lower amongst households who appear to be credit constrained. These findings are consistent with a simple extension of the ‘benchmark’ model to include borrowing constraints. However, they found that risk-averse households were somewhat less likely to take up rainfall insurance, not more likely as the benchmark model suggested. This result was most pronounced amongst households who were less familiar with the insurance provider, BASIX, or did not use other types of insurance.

These finding suggest that many households may be uncertain about the insurance product itself, leading risk-averse households, households with for whom evaluating new technologies is costly, and households who place less trust in the insurance provider, to avoid purchasing insurance. This finding is consistent with qualitative evidence: lack of understanding about the product was the most commonly cited explanation for not purchasing insurance, cited with 25 per cent frequency amongst non-purchasing households.

This paper, which is still a draft working document, represents a preliminary step towards documenting the features of ‘real world’ micro-insurance contracts, and understanding the barriers to increased take-up of insurance in developing countries. So far, the insurance product studied has not been entirely successful in reaching poor, constrained, vulnerable households who stand to benefit most from protection against deficient rainfall.

Author X. Gine; R. Townsend; J. Vickery
Number of Pages 55 pp.
Primary Language English (en)
Region / Country Global
Related Resources
Index insurance for weather risk in lower income countries Document 2006

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This primer focuses on innovation in weather insurance designed to fit the special circumstances of lower-income countries where rural and agricultural financial markets are largely underdeveloped. Weather insurance is important to the long-term economic development of lower-income countries as a means of spurring rural finance and agricultural and rural development. Weather insurance can also help alleviate chronic poverty. The lack of access to weather insurance can cause rural and farm households in lower-income countries to consume their assets to survive an extreme weather event, or their assets may be destroyed, throwing these households into a cycle of poverty with no means of recovery. To be clear, the lack of weather insurance may be only one of several constraints that are slowing progress in economic development and rural financial markets in lower-income countries.

As critical as viable insurance markets are for economic stability and development in lower-income countries, creating these markets is a difficult undertaking. Looking to models from higher-income countries provides unsatisfactory answers. For example, agricultural insurance in higher-income countries is typically heavily subsidized. Lower-income countries cannot afford such heavy subsidies, particularly because a much larger percentage of the population is usually engaged in agriculture. Equally challenging, farm households in lower-income countries typically operate much smaller farm units, compounding the difficulty of providing rural financial services.

Other financial services, such as savings and loans, are also more accessible to small households in higher-income countries, allowing them to take more risk such as adopting new technologies and other activities to develop their businesses. This is the path to economic growth. Without strong financial services, countries are limited in their growth: limited formal rural financial markets can hinder development and the ability of the rural poor to climb out of poverty. Given the dominance of agriculturally dependent populations in lower-income countries and the typical pattern of a larger percentage of the poor living in rural areas, it is appropriate that national policy work toward building stronger rural financial services. This primer focuses on a new approach to weather insurance—index insurance—that can help develop and strengthen rural financial services. The intent is to provide the reader with the needed information to determine the potential viability of using index insurance for weather risk.

The document is structured as follows:

  1. Effects of weather risk in lower-income countries
  2. Importance of weather insurance for lower-income countries
  3. Traditional weather insurance for mitigating agricultural weather risks
  4. A new approach - index insurance for weather risk
  5. Role of governments and donors
  6. Preconditions for and restrictions to index insurance
  7. Feasibility study for index insurance
  8. Pilot-testing of index insurance
  9. Applications of index insurance

This primer is clearly a very valuable addition to a growing body of reference material on this subject and is highly recommended to those wishing to make informed decisions about incorporating index insurance into their activities.

Author GlobalAgRisk
Publisher USAID
Number of Pages 51 pp.
Primary Language English (en)
Region / Country Global
Related Resources

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