The study on a hypothetical area yield index insurance contract in Ecuador found that for most farmers in the sample, the area yield index insurance would have performed equally well or much better at the same dollar-for-dollar cost compared to the existing conventional insurance contract.
The typical challenges of basis risk and low uptake have plagued index insurance products for years, but AMA Innovation Lab researchers are crafting solutions by designing innovations around the structure of the insurance contracts.
Improving index insurance products, contract design, marketing and policy can contribute to delivering on its promise of promoting independence, prosperity and resilience among these smallholder farmers.
Because the VISA Model uses savings groups to aggregate small purchases into one larger purchase, and to pass on to the insurance company, the operating costs of the company are reduced and the sales increased.
On average, AMA Innovation Lab researchers find that after the drought, insurance leads to a 36 percent decrease in sales of remaining livestock, and a 25-percent reduction in household meal consumption.
With new drought tolerant (DT) maize varieties ready to go to market, and with our growing knowledge of how to design effective insurance products for small-scale agriculture, now is an opportune moment to close this critical knowledge gap.
BASIS researchers, in partnership with leading geo-spatial software engineering firm (SI Organization), developed a potential solution to these problems by using satellite information at high resolution, coupled with better modeling approaches, to reduce basis risk and improve index insurance performance.
Index insurance shows considerable promise, especially in settings like the arid and semi-arid lands of east Africa where conventional insurance to cover potentially catastrophic herd losses does not exist.
Index-based livestock insurance (IBLI), aims to protect against the covariate risk of catastrophic livestock loss due to drought. Understanding what determines access to IBLI by gender can shape strategies to equitably provide access to this and other innovative risk management products.
The results from the first sales period in Mali indicated that those farmers who purchased the insurance were more likely to expand their cotton cultivation, increase use of productive inputs and increase the use of seeds.
To support the use of agricultural credit using index insurance The Ohio State University (OSU) and the African Center for Economic Transformation (ACET), in collaboration with the University of Ghana, will undertake a program of research, outreach, and education.
The Borana plateau in southern Ethiopia is a vast arid and semi-arid pastoralist territory. Livestock in this area comprise the majority of household’s non-human capital and are responsible for more than two-thirds of their average income.
Pastoralist households in the arid and semi-arid areas of northern Kenya are especially vulnerable to the risk posed by climate change. This risk-reduction strategy has the effect of keeping households poorer than they need to be.
Our first round results have already shown that farmers switch to riskier, higher-yielding crops from droughtresistant crops after the formal insurance product is offered to them, indicating that index-based insurance may be a cost-effective and viable policy response to address this major constraint to growth
By exploiting the capacity of a public reinsurance facility to operate in an uncertainty-neutral way, this brief argues that the promised impact of agricultural insurance can best and most cost-effectively be achieved by a novel public-private reinsurance partnership.
This brief examines the parallel but currently separate efforts by the public and private sectors and demonstrate how combining efforts could lead to important synergies and advantages for both sectors.
An important aspect of this evaluation will explore whether or not the asset accumulation and productivity effects of insurance are sufficiently robust that they create a case for subsidizing insurance premiums as an alternative to cash transfers or food aid.
Financial liberalization, combined with efforts from development agencies and the private sector, will significantly increase the range of products available to agricultural households around the world.
If it were possible to insure MFIs against correlated risk, the benefits may extend to agricultural producers in the form of more available and less expensive credit, thus reducing the amount of rationed households.