The World Bank Group’s Global Index Insurance Facility (GIIF) was established in 2009 to provide comprehensive insurance-based programs and support the development of local markets for index and catastrophic insurance in developing countries including Sub-Saharan Africa. For more than 6 years, GIIF has been working with project implementation partners, (re) insurance companies, microfinance institutions (MFIs), banks, cooperatives, and all relevant stakeholders in the value chain to implement projects and make real impact on the ground. Implemented projects have facilitated more than 1.5 million contracts, covering over 6 million individuals.
As GIIF continues to strengthen and build the development of index insurance through capacity building and technical assistance related activities, the program has also focused on funding innovation that leverages climate-smart technologies and their applications on index-insurance, while enabling stakeholders to improve the quality of their insurance products.
This submission is to highlight GIIF’s collaboration with another successful implementing partner ACRE Africa. ACRE Africa, a business company evolved from the Kilimo Salama project in Kenya, is a service provider working with local insurers and other stakeholders in the agricultural insurance value chain operating mainly in Kenya, Rwanda and Tanzania. The Kilimo Salama project was referenced by Her Majesty Queen Máxima of the Netherlands as an example for microinsurance programs at a plenary of Adaption Futures 2016.
ACRE Africa actively engages with the region’s agriculture finance sector and currently works with ten financial institutions, including Savings and Credit Cooperative Organizations (SACCOs), banks, and MFIs to facilitate access to microinsurance products. Moreover, as of end 2016, over 1,000,000 farmers in Kenya, Tanzania, and Rwanda have been covered with insurance products, with insured sum of over $US 56 million against a variety of weather risks.
Usage of Mobile Phone Technology in the Seed Replanting Guarantee Product
As farmers in Kenya and East Africa are increasingly getting affected by unpredictable weather patterns and suffer losses as a result, ACRE Africa has created numerous interventions that help mitigate such losses such as the Replanting Guarantee Product (RPG), one of ACRE Africa’s flagship microinsurance products. Essentially, the Replanting Guarantee leverages mobile platform to give farmers easier access to crop insurance. The product entails ACRE Africa packaging insurance with seeds that offer a weather index based germination insurance and the farmer conveniently registering for insurance using a unique code sent via mobile phone upon opening a bag of seeds.
The Replanting Guarantee Product is one of the region’s best innovations in microinsurance. This success is attributed to the ACRE’s capacity to forge partnerships with the private sector such as a mobile network partner as well as its own robust mobile platform that enables bundling of farm inputs with insurance.
In 2016, there were over 100,000 RPG registrations for the two rain seasons in Kenya. This was a 519% growth since the product had been launched in 2013. This innovative program has clearly enhanced insurance penetration in the low-income segment, resulting in a higher chance for smallholder farmers and SMEs to manage and protect themselves against shocks. Through data obtained from the platform, insurance companies and microfinance institutions are able to not only price insurance products but also successfully sell them. In terms of GIIF and its overall outreach during 6 years of implementation (2010-2016), it can be highlighted that GIIF-supported projects have insured more than 6 million individual farmers, pastoralists and micro-entrepreneurs globally. In 2015 alone, more than 483,000 insurance contracts were sold, representing a 25% increase from the previous year (386,000 in 2014). In addition, an impact assessment study conducted by a GIIF supported project in Kenya showed that insured farmers invested 19% more and earned 16% more than their uninsured (neighboring) counterparts, and 97% of the farmers insured received loans linked to the insurance (177,782 farmers received $8.4 million in financing) in part due to index insurance products.
GIIF has a successful track record in providing and contributing to the development of index insurance in Africa with its work with ACRE Africa, and also through collaboration with partners such as ILRI.