1. Index Based Livestock Borana Programme, Ethiopia
OIC's Experience in Index Based Livestock Insurance
and
the Challenges
Index Insurance for Livestock in the IGAD Region
Policy Roundtable and Technical Workshop
Presented by: Asfaw Benti, Chief Executive Officer
June 25, 2019
ILRI Campus, Addis Ababa
Index Based Livestock Borana Programme, Ethiopia

2. Outlines The Company’s Background Definitions of Microinsurance
Microinsurance Products
OIC’s Experience in MI
IBLI
Client education
Roles of Partners in IBLI
Challenges of IBLI
Ways Forward

3. The Company’s Background
OIC is a young and innovative private insurance company established in January 2009 GC with a paid up capital of ETB 26 million.
Currently it’s paid up capital reached ETB 250 million
Number of Shareholders:858 comprising:
Individual shareholders
Two big Banks i. e CBO ( majorly owned by farmers through their unions) and OIB

4. …cont'd
Regional Development Enterprises: Oromia Water Work Enterprise (OWWCE), Oromia Forest and Wild Life Conservation (OFWLC)…etc
34 Farmers’ Coop Unions i.e Oromia Coffee Growers' Union, Erer, Meki Batu, Bacho Waliso, Gibe Dhidhessa, Raya Wakenna, Carcar Oda Bultum etc

5. Microinsurance Definition
“…the protection of low-income people against specific perils in exchange for regular premium payments proportionate to the likelihood and cost of the risk involved”
~ Draft Donor Guidelines, CGAP Working Group (2003)
“…not a specific product or product line. It is also not limited to a specific provider type. Microinsurance is the provision of cover to a specific market segment, i.e. low-income persons.”
~ IAIS Issues Paper (2007)

6. Understanding Microinsurance
Microinsurance can be seen from two complementary perspectives…
A way of extending social protection to excluded populations
A new market for the insurance industry
The microinsurance continuum
Social Protection
Benefits are human right (e.g. health, pension)
Contains a redistributive element
New Market
About 4 billion persons living on less than $2/day
Product and distribution innovations can make the poor a viable market for insurers
Adapted from -Craig Churchill, ILO

7. Microinsurance Products
1. CROP INSURANCE
Multi Peril Crop Insurance
Weather Index Crop Insurance
Named Peril Crop Insurance
2. LIVESTOCK INSURANCE
Multi Peril Livestock Insurance
Index Based Livestock Insurance

8. ……. cont’d 3. LIFE MICROINSURANCE Term Life Insurance
Credit Life Insurance
Credit Life Insurance with Funeral
Credit Life Insurance with Disability
Credit Life Insurance with Funeral &Disability
4. HEALTH MICROINSURANCE
Direct Medical Costs
Maternity
5. PROPERTY MICROINSURANCE
Fire and Lightning
Burglary and Housebreaking

9. OIC’s Experience
Oromia Insurance Company S.C is rendering full fledged class of businesses under one roof: General, Life and Microinsurance including Agriculture.
OIC has been rendering the following Microinsurance services to the Rural Farming and Pastoral Communities since 2010 GC, i.e. just a year after it begun operation:
Weather Index Crop Insurance (WICI)
Multi-peril Crop Insurance (MPCI)
Index Based Livestock Insurance (IBLI)
Multi-peril Livestock Insurance (MPLI)

10. Index Based Livestock Insurance (IBLI)
Index based Livestock Insurance (IBLI) Borana program is an asset protection contract designed to compensate pastoralists against forage scarcity that may happen as a result of drought.
Was launched in 2012 and still running
It is an annual contract combining two coverage seasons: Long-Rain Long-Dry LRLD (58%) (March-September) and Short-Rain Short-Dry (SRSD) (42%) (October-February).

11. IBLI…Cont’d The insurance is voluntary programme.
No premium subsidy except for three districts, Moyale, Miyo and Guchi; for a limited number of pastoralists living in 14 Kebeles.
TROCAIRE/CIFA Ethiopia, a local NGO is providing 35% premium subsidy in these districts starting from Jan, For the last window reduced to 25%.

12. Ayuda en Accion Ethiopia (AeAE) in collaboration with CIFA Ethiopia providing 35% premium subsidy in Moyale and Guchi districts on 6 kebeles since Aug, 2018.
Village Insurance Promoters (VIPs) and Sales Agents are trained and deployed to undertake insurance education and premium collection activities respetively.
OIC pays incentives for VIPs and commission for Sales Agents.

13. Client Education
Insurance extension work, marketing activities, premium collection (from coops) and etc works were the sole responsibility of OIC.
OIC educate through:
Pictorial teaching aids;
Community dialogue;
Market day education through announcements;
Radio programmes;
Developing interactive mobile application in local language; this is recent development.
Organizing payout ceremonies when there is payout.

14. Insurance education using pictorial teaching aids

15. Community Dialogue

16. VIPs & Agents Incentive
Summary of IBLI
S.No
Fiscal Year
HHs Insured
Sum Insured
Premium Collected
Claims Paid
VIPs & Agents Incentive
Loss Ratio (%) 1
2012/13
627
5,172,500.00
467,546.89
46,754.69 2
2013/14
509
3,558,500.00
339,190.98
67,267.00 3
2014/15
1,446
8,434,800.00
798,894.65
585,887.00
188,780.00
73.33 4
2015/16
1,299
2,903,500.00
281,374.11
29,080.00
98,750.31
10.33 5
2016/17
2,195
12,285,000.00
1,203,423.25
1,893,030.00
192,197.75
157.30 6
2017/18
4,963
42,336,000.00
4,126,157.00
5,233,130.00
593,120.00
126.83 7
2018/19
2,968
16,881,500.00
1,657,930.00
231,880.00
279,737.35
13.99
Total
14,003
91,592,200.00
8,881,610.07
7,968,847.00
1,466,607.37
89.72

17. Graph 2: IBLI Performance; Relationship b/n Premium and Claim

19. SIIPE
OIC participated in a pool of insurance established. to render IBLI in Somale regional state.
It has been running for the last two years.
WFP is paying 100% of the premium.
The regional government is a policyholder.
During first year the beneficiaries were 5,000; this year reached 7,500 HHS.

20. Borana SRSD 2016 Index Map

21. Borana LRLD, 2017 Index Map

22. Standardized NDVI NDVI DATA – Borana Zone (SRSD 2018) Percentile Level
50 - < 70
35 - < 50
20 - < 35
< 20
Standardized NDVI

23. payout ceremony picture, 18th February 2017 Birr 1.6 Million

24. Payout ceremony picture, Sep. 05, 2017 Birr 5.23 Million

25. Payout ceremony picture, Sep. 05, 2017

26. Roles of Partners on IBLI
ILRI: Providing financial (during the early years) technical support; product design, index reading …etc
CTA: financing the IBLI programme, since 2017; Mobile learning customization, training costs, admin costs, marketing campaigns…etc.
TROCAIRE/CIFA: providing 35% subsidy for pastoralists, cover training costs & promotion materials for pastoralists from the two districts for 8 kebeles; around 50% of the total premiums collected from these districts.
Ayuda en Accion Ethiopia (AeAE) in collaboration with CIFA Ethiopia providing 35% premium subsidy in Moyale and Guchi districts; 6 kebeles since Aug, 2018.
Kifiya Financial Techinology (KFT): Providing technological Enrollement using smart phone.

27. Challenges Lack of government intervention.
Lack of adequate intermediaries.
Affordability/lack of premium subsidy/
Knowledge gap: Product Design, Pricing, Index Monitoring etc.
Weak insurance extension services.
Less participation during good forage conditions.
Lack of infrastructure. Telecom, Road etc.
Lack of coordination among Public-Private partnerships (PPP)

28. Ways forward
MI (specifically index insurance) should include and involve large number of HHs to scale it out and give business sense. For this to happen:
Government intervention is VERY necessary!
Gov’t can intervene in multiple of stages and steps. i.e:
Extension works;
Client registration;
Providing premium/loss subsidy etc

29. …Cont’d
2. Donors/Development Partners and Actors/Research Institutions SHOULD still to play big ROLES!
Technical backstopping and further researches;
Premium/Loss subsidy (risk layering);
Lobbying Gov’t and Policy-Makers to learn lesson from KLIP and others around the globe to strengthen their support regarding index insurance products.

30. …cont’d 3. Insurance Company/ies:
To handle index/microinsurance risk/s in business way and discharge Corporate Social Responsibility accordingly.

31. Together, we can!!!
Thanks!!!