1. ACRE Africa Sustainable Agriculture through Agriculture Insurance Rahab Kariuki, May 2017

2. Contents About Acre Africa
Introduction to Agriculture Insurance and KPIs
Why index insurance?
A few challenges of scaling agriculture insurance
Conclusion

3. About ACRE Africa Founder
Micro-insurance product designer linking stakeholders to agricultural insurance through localized solutions to reduce climate risks
Licensed insurance intermediary, supporting local insurers to offer smallholder-focused insurance across value chains
Offices present in Kenya, Rwanda and Tanzania
32 professional staff with expertise in Insurance, Agriculture and Veterinary Sciences, Actuarial Science, Marketing, Strategy and Finance
Impact Investors

4. Acre Africa’s Role on the Value Chain

5. Source: World Bank, 2011

6. Available Products in East Africa
MPCI- inspection based yield guarantee
Livestock Index Based Insurance
Seed insurance, Season weather and Area Yield index
Dairy Insurance-Indemnity based
Hybrid- Index and MPCI

7. Why Index Insurance?
According to FAO 80% of farmland in sub-Saharan Africa and Asia is managed by Smallholders.
While 75% of the world’s food is generated from only 12 plants and 5 animal species, making the global food system highly vulnerable to shocks.
Index insurance is a relatively new but innovative approach to insurance provision that pays out benefits on the basis of a predetermined index (e.g. rainfall level) for loss of assets and investments
African economies rely on agriculture

8. KPI: Premium per life is high for Agriculture
Source: State of Micro insurance 2016, Micro insurance Network

9. KPI: High Aggregate Claims Ratio
Ratios were calculated as claims paid over gross written premiums
Source: State of Micro insurance 2016, Micro insurance Network

10. Challenge 1: “Insurance is sold not bought”, but farmers do not trust insurance sales men.
Regulatory framework does not allow unlicensed parties to distribute insurance
Applied for an exemption in Kenya to allow agro input shops
Roles played by Agro-input shops:
Premium aggregation
Product Information
Registration of insured
Hold a physical master policy document for reference

11. Challenge 2: Insurance is not incorporating risk Reduction
Most insurance approaches do nothing to reduce risk. Perhaps they even introduce moral hazard.
Even insured farmers have a challenge coping with poor seasons. Our data shows that 50-70% of farmers insuring seed skip a season after a payout depending on how poor the season was.

12. Challenge 3: Insurance is not demand driven yet
Most index insurance programs since early 2000 have been developed and financed by donors not risk carriers (insurers or local governments). Is the opportunity clear?
What can be done to support insurance?
ICT and the data revolution can be harnessed to improve index insurance so it better captures the risks that are important to farmers and for reduction of basis risk.
Increase of capacity of support services such as Actuarial services, loss assessment and farmer aggregation and collection of KYC information.
Index insurance can be better integrated into on-going climate adaptation and climate service initiatives.
We need innovative ways to deliver index insurance products to farmers.

13. An Introductory Micro Insurance Product Leveraging on Existing Seed Distribution
SMS unique code to short code
Register 
Opens bag on planting, finds card inside 2 1
Purchase 
Farmer prepares for beginning of season
At start of season farmer purchases insured bag
Full season cover Compensation sent to farmer via mobile money
4A2
Successful germination= automatic full season cover
Insured-Season 
4A1
the Insurance Provider gets farmer location from location based service system which locates phone, and monitors satellite imagery for that location 3
In the case of germination failure after 21 days without rain
Compensation sent to farmer via mobile money if no rainfall in location
4B1
So that farmer can replant and harvest the same season
Replant 
4B2

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