"We make the world more resilient" – a bold vision statement we have given ourselves. But how does this statement translate into real world outcomes? Over the last three years we have been working on the "Kenya Livestock Insurance Program" (KLIP) which was finally launched by the Government of Kenya as a pilot in two counties in October 2015. The pilot is currently being up-scaled to another four counties and the government has launched a second window to also cover crops.
It is a complex public private partnership between the Ministry of Agriculture, the World Bank, the International Livestock Research Institute, several local insurance companies forming a consortium, with Swiss Re as the lead reinsurer. KLIP's goal is to protect livestock, such as camels, cows and goats, owned by vulnerable pastoralist communities regularly affected by drought. It is estimated that a minimum of five animals are required to sustain a herd. Hence, the insurance is designed to pay out early in order to protect livestock instead of replacing it. The lump sum payout should be sufficient to buy enough feed and water to get five animals through a drought.
The technical design of the insurance solution is very sophisticated. The insurance solution is based on an index benchmarking photosynthetic activity which is derived from optical satellite data. Once the index crosses a pre-defined threshold, a pay-out will be triggered.But how does this correspond to the situation on the ground? Livestock is a very important asset for pastoralist communities. It has an important cultural and symbolic value indicating the status of the owner in society. It is also a source of income as livestock is traded and animal products being consumed. A loss of livestock is a big concern to these communities and the insurance concept is well received as it helps protecting the herds.
But it is hard work and the local insurance companies are doing a good job of socializing insurance principles and explaining what satellites are. Obviously, this is easier than expected in a country like Kenya where the majority of people use mobile phone services to transfer money. The first pilot season proved that the concept works when insurance was paid to 275 nomadic cattle farmers in Wajir County.
KLIP clearly addresses a protection gap. Where else can insurance play an important role in addressing the everyday challenges of low-income households, allowing them more security, and even a possibility of building a better life?
Category: Food security