Since 2011, ILRI and its partners in the public, private and non-profit sectors have pursued a comprehensive research agenda aimed at designing, developing and implementing market mediated index-based insurance to protect livestock keepers from drought related asset losses, particularly those in the drought prone Arid and Semi-Arid Lands (ASALs).
New developments in technology bring areas of insurance that were previously not cost-effective into financial viability. In an article published on 2 March 2015 in Reactions magazine online, Victoria Beckett reports that ‘[r]ecent technology has allowed satellite imagery to assess weather damage’ and [o]ver the last few years “index-based livestock insurance (IBLI)” has provided insured pastoralists across Africa with …
Recently, there has been much excitement around the use of index-based insurance as an alternative to conventional insurance products that may extend the rural poor’s access to formal insurance coverage in developing countries.
Migrant pastoralists on the arid and semi-arid lands (ASAL) of East Africa are among the poorest and most vulnerable people on earth. Most of their economic activity is based around livestock herding and management.
Uninsured risk exposure and the experience of uninsured shocks in low-income rural communities cause serious welfare losses and distort behaviors, potentially even resulting in poverty traps. However, conventional insurance products are routinely unavailable due to moral hazard and adverse selection problems, as well as high transaction costs in infrastructure-poor areas.
The new study, carried out by the CGIAR Research Program on Climate Change, Agriculture and Food Security (CCAFS) and the International Center for Climate and Society (IRI) at Columbia University showcases projects that have overcome many of the challenges that have previously hindered the uptake of index-based insurance.
Through collaboration among the International Livestock Research Institute (ILRI), Cornell University, donor agencies such as the United States Agency for International Development (USAID), insurance companies, local radio stations, and pastoralists themselves, a new insurance system is being tested in Ethiopia
IBLI featured as part of the KRDP end of the year newsletter