BASIS, the United States Agency for International Development, the Food and Agriculture Organization of the United Nations, the Micro-Insurance Innovation Facility of the International Labour Organization, and Oxfam America announce the creation of the Index Insurance Innovation Initiative (I4). This initiative is a response to the overwhelming evidence that uninsured risk can drive people into poverty and destitution, especially those in low-wealth agricultural and pastoralist households. Risk can cause people to shy away from high-return activities or pursue defensive savings strategies that cut off sustained accumulation of productive assets. Risk also inhibits the development of rural financial market, which reinforces risk’s negative impacts.
Finding ways to deal with risk and thus reduce poverty has long been a goal of development policy. I4 is developing a global action plan to reduce risk and poverty among small-scale agricultural and pastoralist households. While there is ample theory to show that index insurance can alter poverty dynamics, there is still much to learn about its effectiveness in practice. To rigorously test the hypothesis that by removing correlated risk from smallholder agricultural and pastoral systems we can reduce poverty and deepen financial markets in agricultural areas, the I4 team will design and implement a new generation of livelihood-optimized index insurance contracts. Potential impacts include improving technology uptake by farmers, thus increasing their incomes, attracting lenders into rural markets, and reversing the dynamics that create destitute families, thus reducing the massive costs of direct aid programs.
Director Michael R. Carter
Assistant Director Tara Steinmetz
Featured I4 Projects
- Insuring Against the Weather: Integrating Generic Weather Index Products with Group-Based Savings and Loans
- Agricultural Insurance in Nepal
- Index Insurance: Innovative Financial Technology to Break the Cycle of Risk and Rural Poverty in Ecuador
- Index-Based Livestock Insurance in East Africa Project
- Demand for and Productivity Impact of Weather Index Insurance in Ethiopia
- Developing a Satellite based Index to Predict Crop Yields in Smallholder Agriculture
- Selling Formal Insurance to the Informally Insured
- Weather Insurance, Price Information and Hedging: Financial Initiatives to Help the Poor Manage Agricultural Risk