Public-private funding essential to scale up agricultural insurance | New
“In monetary terms, this equates to a coverage gap of between $ 60 billion and $ 80 billion, which would represent an annual premium value of $ 8 billion to $ 15 billion,” she said. Speaking at a briefing hosted by Axa XL at COP26, Diro, who is associated with disaster risk finance at development-focused engineering company Tetra Tech, said less than 20 percent of the world’s smallholder farms have access to agricultural insurance, with only 3 percent. covered in sub-Saharan Africa.
Diro said his experience over the past decade with multiple programs that use insurance as a tool to build resilience highlights that there are no quick fixes in determining success.
Sahel said it would need commercial capital, donor funding and technical assistance to help close this coverage gap and expand many existing index insurance projects.
“What success means will depend on the context. The insurance you develop for Kenya will not necessarily be suitable for Ethiopia or Malawi, ”she said.
“But the top performers put their customers’ needs first and offer a very personalized approach that gives their customers a voice. ”
The R4 Rural Resilience Initiative, launched by the World Food Program and Oxfam America in 2011, has developed programs to compensate for crop losses in 10 countries, including Ethiopia, Kenya, Malawi, Senegal and Zambia.
“There are independent evaluations that have shown that this program has had a significant social impact,” she said.
“And in Malawi, the number of farmers using negative coping strategies has declined by 50 percent.
“In Ethiopia, farmers have reinvested 50 percent of their earnings back into their farms. In Senegal, participants had a food consumption score four times higher – an indirect measure of household food security – than uninsured farmers.
Diro said his work on these programs over the past decade has highlighted key elements critical to effectiveness on the ground.
“The first important thing is to develop affordable products that respond to the risks and vulnerability of farmers, with an emphasis on affordability.
“During the same season, farmers can face different vulnerabilities – it is essential to understand them and to adapt the products to deal with them.
“It is very important to consider a portfolio approach – farmers need hedging for a portfolio of risks on the farm rather than for a single crop.
She said basis risk – the extent to which actual losses may not be recouped by a parametric trigger – is one of the main challenges for weather risk insurance products.
“There are only a limited number of weather station networks in Africa and those that do exist may not report consistently.
Additionally, she said there had been substantial advancements in artificial intelligence and machine learning techniques to inform crop analysis over the past decade.
“But there has been a lot of progress in terms of satellite and remote sensing datasets, with several types of datasets freely available and accessible.”
“These have huge potential to improve and further tailor insurance products,” she said. “And could potentially have a big impact in helping to scale up.”
News Business Highlights
- Public-private funding essential to scale up agricultural insurance | New
- Check out all the news and articles for business news updates.
Disclaimer: If you need to update / change this article, please visit our help center.
For the latest updates Follow us on googIe New