Swiss Re has announced the Kenyan Livestock Insurance Programme (KLIP) will be making a payout of about $2 million to 12,000 Kenyan farmers at the end of February, with index-based payments pegged to satellite measurements of data set to roll out with the average payout at $170 per household.
The innovative insurance programme collects data using satellites to monitor vegetation available to livestock, and triggers financial assistance that is paid out directly to the pastoralists’ bank accounts or through mobile phone accounts.
The funds are expected to help save around 70,000 livestock, that make up the livelihood of approximately 100,000 people across the counties of Turkana, Wajir, Mandera, Marsabit, Isiolo and Tana River.
Willy Bett, Cabinet Secretary for Kenya’s Ministry of Agriculture, Livestock and Fisheries, said; “This is the largest livestock insurance payout ever made under Kenya’s agricultural risk management program and the most important as well, because without their livestock, pastoralist communities would be devastated.
“This insurance program is not just an effective component of our national drought relief effort. It’s also a way to ensure that pastoralists can continue to thrive and contribute to our collective future as a nation.”
The Swiss giant has reinsured APA Insurance, which leads the programme with a consortium of seven insurance companies; UAP, CIC, Jubilee, Heritage, Amaco and Kenya Orient, in a partnership with the Kenyan government.
Livestock are a major element of the Kenyan economy, according to Swiss Re, between 2008 and 2011, livestock losses in Kenya accounted for 70 percent of the USD 12.1 billion in damages caused by drought – a figure which reveals just how far-reaching the innovative technology driven scheme could be in offering the Kenyan economy security against severe weather conditions.
The pilot programme being rolled out in Kenya works to end drought emergencies and could act as a catalyst for further insurance schemes that harness mobile, satellite, and other technologies to make the offer of insurance attainable to lower-income farmers throughout Africa.
KLIP was developed by Kenya’s Ministry of Agriculture, Livestock and Fisheries with technical assistance from the International Livestock Research Institute (ILRI), the World Bank Group, and Financial Sector Development (FSD) Kenya and it’s now part of Kenya’s national strategy to end drought emergencies.
Esther Baur, Director of Swiss Re Global Partnerships EMEA, commented; “KLIP provides an important safety net to Kenyan herders who for centuries have grazed their animals across vast stretches of arid and semi-arid lands. The programme highlights Kenya’s pioneering role in providing financial drought protection for its people. This public private partnership combines local engagement and expertise with global financial strength and we see it as a role-model for the rest of Africa, and beyond.”
“The government and its partners have brought the latest technological and financial tools from a group of committed and innovative private sector players to functionality. The payouts prove that the program is delivering a financial safety net where it is most needed,” concluded Lovemore Forichi, Swiss Re’s Head of Agriculture Reinsurance Africa.
Initiatives such as this demonstrate how index insurance technology and structures can be utilised to provide insurance to the very poorest as they grow over time creating parameterised pools of risk which can provide opportunity to reinsurance.