This Spotlight illustrates how MQS works with three hypothetical datasets. While two of the three contracts fail MQS, each can be improved in different ways to provide greater value to farmers.
The AMA Innovation Lab is leading a pilot in Tanzania that bundles drought-tolerant maize with index insurance for seed replacement. Adoption rates and the effective triggering and distribution of in-kind payouts suggest this bundled approach could be successfully scaled more broadly.
The Global Action Network (GAN), a collaboration between the AMA Innovation Lab and the ILO’s Impact Insurance Facility, has just released a “3-D” Client Value Assessment tool that provides a multi-dimensional measure of an insurance contract’s total value proposition for existing or potential clients.
An audit rule should ensure that index insurance contracts based on remotely measured data offer the same protection as contracts based on area-yield measurements.
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.
Temporary subsidies share the risk of experimentation. If these subsidies induce learning and continued use of the new technology after the subsidy expires, these are a smart public investment.
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.
In the wake of the earthquake, Heifer Nepal deployed a 3-fold response: immediate relief, livestock-related relief, and implementation of a revolving fund that established interest free loans to affected Heifer beneficiaries.
Researchers supported by the Feed the Future Assets & Market Access Innovation Lab launched an Index-Based Livestock Insurance (IBLI) pilot in the Marsabit District of northern Kenya.
By adapting traditional financial products delivered by microfinance institutions, and making them more flexible to meet the needs of farmers and rural inhabitants, many of these challenges faced by index insurance can be overcome.