Developing and piloting index based livestock insurance to reduce poverty and vulnerability

In collaboration with various partners, ILRI has pursued a comprehensive research agenda aimed at designing, developing and implementing market mediated index-based insurance products to protect livestock keepers from drought related asset losses they face, particularly those in the drought prone arid and semi-arid lands. For pastoralists whose livelihoods rely solely or partly on livestock, the resulting high livestock mortality rate has devastating effects on asset levels, rendering them amongst vulnerable populations in Kenya.

Much of the initial phase of the project, which included an extensive program of field work and stakeholder consultation, is now complete. The research has generated useful insights that have been used in the design of index-based livestock insurance (IBLI) products that is better targeted to the various needs of the expected clientele. An IBLI contract has been modelled, priced and tested among the target clientele before implementation. ILRI in collaboration with partners from the public, private and non-profit sectors piloted IBLI contracts for the long rain/long dry season scanning March 2010 to September 2010 in Marsabit District. In October 2011, the project made its first payouts to livestock keepers in Marsabit District.

Objectives:

• To effectively introduce index-based livestock insurance products to pastoral and agro-pastoral populations to help them manage drought-related livestock mortality.
• To learn and document the effectiveness of use of index-based livestock insurance as a tool for managing weather related perils and to incorporate lessons-learned in efforts to upscale the pilot for national rollout.