learning event no 6, session 1, from agriculture and rural development day (ardd) 2011

Crop microinsurance in support of climate change adaptation

"Patrick Mommeja"

Head, Life Related Insurance "Allianz Africa!

!!

Learning Event 6: What role can the private sector play in climate smart smallholder agriculture in Africa?!

Agriculture and Rural Development Day!COP 17!

Durban, South Africa!3 December 2011!

!

Why crop microinsurance in Africa ? "•  Allianz Africa : 11 countries in West

and Central Africa; Madagascar ; 15 subsidiaries,!

•  Microinsurance, a social commitment since 2005 (Allianz Group) and 2007 (Allianz Africa),!

•  AGRA enabled Allianz Africa to venture space: to build resilience of African smallholders to climate change!

Weather index insurance!Allianz Africa – AGRA/AECF partnership!•  2 index pilots in rain deficit insurance in Mali and Burkina

Faso launched !2011!•  Distribution by local MFIs, insurance beneficiaries!•  Based on satellite data!

Weather index insurance /2!•  Covered 316 maize farmers in 2011!– Gross premium: 2.4 (Burkina Faso) + 3.5

(Mali): 5.9 million FCFA !– Claims: 4.6 million FCFA i.e. 100-150.000

FCFA/ha!– Claim ratio: 78%!

•  Solution to cope with fraud and moral hazard!

The model"•  Determination of relative evapotranspiration that

mirrors crop growth and development!•  Definition of growing period starting with a index > 65 mm!•  Duration of growing period: 12 decades!•  Determination of payout: max {0, min (tick * (trigger-

relative evaporation index), policy maximum payout)}!•  Tick = maximum payout/(trigger – exit)!•  Trigger point = starting index of the insurance !•  Exit point = ending index of the insurance !

020000400006000080000

100000120000140000

100 150 200 250 300 350 400

Payo

ut [F

CFA

]

Cumulated rainfall [mm]

drought case

 Exit point""

Trigger point""

Crop yield insurance"– 1 pilot on average yield in Mali!– The yield has been calculated on (2003-2008)

data : • trigger point : 900 kg/h • coverage : 95,000 FCFA/h,!

– Distribution has been made by CMDT for the BMDA the beneficiary of the insurance!

– Covered 326 cotton farmers in 2011 ! !! !!

First report"•  Pioneer experience in West Africa!•  Voluntary insurance!•  More than insurance: linked to a loan therefore means to

ease access to credit !

But"•  Weakness of local insurance capacities!•  Lack of knowledge!•  Population wary of private insurance!•  Unreliable data( cotton),!•  Costly pilot due to farmer heterogeneity with regard to risk

exposure and in agricultural production!

Scaling up and out"•  Focus on the rain deficit process!•  To continue with AGRA initiative: Objective to protect

15,000 farmers in 2012!•  Explore GIFF management project (West African crop

insurance initiative) runs by PLANET GARANTEE!•  Use new technologies to reach the farmers (mobile

phone, remittances)!•  But three main issues:

• to keep up our reinsurance capacity• to reduce the cost of crop insurance for the farmer • to approach the specific populations !

Thanks for your attention!"