1. ESADA 2012

2. Livestock Insurance Best Practices / Lessons Learned John MacKillop Land OLakes International Development Division Dairy / Livestock Practice Manager

3. Risk Management -Agriculture is a high risk business Property risk Liability risk Market risk

4. Useful Definitions -Actuary -Underwriting / Coverage -Premium -Indemnity / Pay out

5. Livestock Insurance -Types of losses -Frequency and severity of losses -Risk characteristics of individuals -Value of loss -Affordable product -Insurance fraud

6. Requirements for Insurance -Identification, Ear Tag -Health Certificate Adequate housing Adequate feed Free of parasites Current with recommended vaccinations

7. Cost of Insurance -Depends greatly on historical data -The size of the insurance package -Greater risk you accept, lower the cost -Examples Malawi 5.1% of value of cow Zimbabwe 2.5% India 3.5% to 4% Kenya Marsabit 3.25% - 5.5% US 2.5% or $33/cow for farm insurance

8. Insurance Claim -Livestock claim form -Veterinary certificate -Treatment chart -Post – Mortem report -Valuation certificate -Photographs -Police report, if applicable

9. Insurance coverage -Is it covered? Negligence / Manageable events Uncontrollable event / natural hazard

10. Sudan livestock insurance Loss Ratio 1998 – 2003 (claims/premium) 1998 – 10.23% 1999 – 76.13% 2000 – 103.03% 2001 – 113.19% 2002 – 57.12% 2003 – 13.52%

11. Index based livestock insurance -Premiums and indemnity based upon an event (drought) occurring which leads to loss of livestock -Strike point (index)of insurance activation -Monitor index not individual loss

12. IBLI Example -10 TLU valued at Ksh 120,000 -Insurance premium Ksh 3,900 (3.25%) -Strike point is 15% -Data index prediction is 13% -Date index prediction is 25% -25% minus strike point 15% = 10% payout -Indemnity payout Ksh 12,000

13. Challenges -Penetrating new markets is expensive -Distribution channels undeveloped -Farmer education, high priority -New products and bundle products