The Story of Index Based Livestock
Insurance (IBLI)
Dr. Rupsha R Banerjee
(Post-doctoral Fellow)
Microinsurance Business Models for Africa
Parallel Session Agriculture –11 March 2015
Zambezi Sun, Zambia

 Drought is a major threat to livestock in the ASALs
 Responses to climatic shocks
o Migration, Water tracking , migration, selling livestock
 Important to protect pastoralists against drought-
related livestock losses
 IBLI is designed using Normalized Difference Vegetation
Index (NDVI)
 One of its kind since it promotes market based
solutions
The Project

Where we are currently working
Source: Google images and Vrieling ,2014

The Product - What it was and what it is
 Was based on statistical
relationship between area-
average livestock mortality and
forage availability
o Payouts were received when the
predicted mortality exceeded a
particular trigger
 Is now designed to protect
against prolonged forage
scarcity.
o Triggers payment to help maintain
their livestock in the face of severe
forage scarcity

The Product – What it was and what it is cont..
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Period of NDVI observations for
constructing LRLD mortality index
Predicted LRLD mortality is announced.
Indemnity payment is made if IBLI is triggered
LRLD season coverage SRSD season coverage
1 year contract coverage
Sale period
For LRLD
Sale period
For SRSD
Predicted SRSD mortality is announced.
Indemnity payment is made if IBLI is triggered
Period of NDVI observations
For constructing SRSD
mortality index
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb
Period of NDVI observations for
constructing LRLD mortality index
Predicted LRLD mortality is announced.
Indemnity payment is made if IBLI is triggered
LRLD season coverage SRSD season coverage
1 year contract coverage
Sale period
For LRLD
Sale period
For SRSD
Predicted SRSD mortality is announced.
Indemnity payment is made if IBLI is triggered
Period of NDVI observations
For constructing SRSD
mortality index
Different payout
timings

What have we been trying to do
 Make IBLI a sustainable commercially viable product
 Create an informed demand
 Reach out in areas where markets often shy away from
 Provide additional mechanisms by which pastoralists
are better prepared against climatic risks
 Get the pastoral community out of the ‘freebies’
culture

Data
August /September Sales 2014
County Underwriter 1 Underwriter 2
Nos. of
clients Premiums No. of clients Premiums Commissions
Marsabit … … 288 242,573 15,403.278
Isiolo 60 106,655 104 339,186 20,351.16
Wajir 150 674,235 … … …
Total 210 780,890 392 581,759 35,754.438

Main barriers to development
 Infrastructure
o Poor basic infrastructure ,low literacy levels, security issues
 Understanding and acceptance
o Most pastoralists don’t clearly understand the basic concepts of IBLI
and have liquidity constraints
 Lack of visibility
o Sporadic appearance during sales period and rapid disappearance
after that
 Capacity Development
o Non-recurrance of information, remuneration and coordination
among underwriters and agents

Putting lessons to Practice
 Restructuring the current Agency Model
o Individual and group models involvement of community
members to become agents
o Certificate of Practice for sales agents by the IRA
 Embedding services
o Partnerships which help in embedding the product as their own
o Bundling of services

Putting lessons to Practice contd…
 Recurrence of Information
o SMS , talk shows and contact information of agents with
community members, radio campaigns, financial literacy
programmes , jingles
 Post sales evaluation

Not just education…
Edutainments
Radio programmes

But also getting feedback …

Looking ahead

 From asset replacement to asset protection
 Simplification of existing training modules through
the process of gamification (C:UsersbrupshaDropboxRupsha's filesTraining Method
Overhaulsatellite animation 3.gif)
o Rating tool and automation of index announcements
o Adoption of a blended learning approach
 Using smartphones to revise fundamental concepts
of IBLI
 Evaluation of new tools and customization as
required
Looking ahead contd…

Source: Douthwaite et.al Agricultural Systems 2002
 Need for a systematic reflection
on experiences from an
institutional learning and change
(ILAC) perspective
 Multistakeholder engagement
drawing from innovation
platform concepts
What can we all do
 Active roles of governments to
support strategy, planning and
having a legal framework

Thank you for your attention 
For more info: https://livestockinsurance.wordpress.com/
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