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Making inclusive insurance work:
Agriculture and climate risks
The UNEP-PSI and ILO webinar series
2
Making inclusive insurance work - A webinar series by the International Labour Organization’s Impact Insurance Facility and UN Environment’s
Principles for Sustainable Insurance (PSI) Initiative
As part of the global agenda of insuring for sustainable development, the Impact Insurance Facility (www.impactinsurance.org) and the PSI Initiative (www.unepfi.org/psi) are organizing a seven-part webinar series with the
theme, “Making inclusive insurance work”.
Today’s session will focus on agriculture and climate risks
Interfacing with the webinar system
3
Tell us what you think. Type your questions/ commentshere even while the presentation is going on. These will only be visible to the staff.
Polls will also be opened during the webinar – participate by clicking on your answers
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Making inclusive insurance work:
Agriculture and climate risks
4
Presenter:Manoj Yadav
Project AdvisorGIZ
Facilitator:Miguel Solana
Senior Technical Officer,Impact Insurance Facility
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Presenter:Marcel Stäheli
Senior Parametric Product Manager
CelsiusPro
Presenter:Samson Ajibola
Head, Agricultural and Micro Insurance
Leadway
“Failure of climate-change mitigation and adaptation” as thegreatest risk facing the world over the next 10 years
According to the WEF 2016 Global Risks Report
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Imp
act
Likelihood
Agricultural and climate risks in the
context of the SDGs
6
What is the biggest challenge for the insuranceindustry to develop solutions for agriculturaland climate risks
1. Data availability and changing patterns of events
2. Understanding of insurance integrated to otheradaptation strategies
3. Delivery mechanisms to reach out to thepopulation
Audience poll 1
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RISKS ASSOCIATED WITH
AGRIBUSINESS AND
INVESTMENTS
Samson Ajibola, Head, Agricultural and Micro InsuranceLeadway
RISKS ASSOCIATED WITH AGRIBUSINESS AND INVESTMENTS
Production Risks:
• Agricultural Production implies expected outcome or yield from cultivated crops or animals reared.
• Any production related activity or event that has a range of possible outcomes is a production risk
• Sources of production risks includes: weather, climate change, pests, diseases, technology, genetics, machinery efficiency, quality of inputs, fire, windstorm, lightning, theft, encroachment
.
RISKS ASSOCIATED WITH AGRIBUSINESS AND INVESTMENTS
Financial Risks:
4 Basic Components of Financial Risks:
The cost and availability of capital;
The ability to meet cash flow needs in a timelymanner;
The ability to maintain and grow equity;
The ability to absorb short-term financialshocks.
Cash flow is especially important because of thevariety of on-going obligations such as inputscosts, cash lease payments, tax payments, debtrepayment, family expenses, and staff salary
.
RISKS ASSOCIATED WITH AGRIBUSINESS AND INVESTMENTS
Marketing Risk:
Marketing is transforming productionactivities into financial success.
Agriculture operates directly or indirectly ina global market. Unanticipated forcesanywhere in the world, such as weather orgovernment action, can lead to dramaticchanges in output and input prices.
Demand versus Supply = Price
Marketing risk is any market related activityor event that leads to the variability ofprices farmers receive for their products orpay for production inputs or services.
Access to markets is also a marketing risk.
.
RISKS ASSOCIATED WITH AGRIBUSINESS AND INVESTMENTS
Human Risks: People are both a source of business risk and an
important part of the strategy for dealing withrisk.
At its core, human risk management is theability to keep all people who are involved inthe business safe, satisfied and productive.
Human risk can be summarized into four maincategories:
Human Health and Well Being; Family and Business Relationship; Employee Management; Transition Planning.
.
RISK ASSOCIATED WITH AGRIBUSINESS AND INVESTMENTS
Legal RisksThe legal issue most commonly associated withagriculture fall into 5 broad categories:Contractual Arrangements;Business Organization;Laws and Regulations;Tort Liability;Public Policies and Attitudes.
.
NAIS was established in 1987 to mitigate risks faced by farmers and thereby promote the growth ofagricultural sector.
NAIC was established by NAIC Act of 1993 as the only underwriter of Agricultural Risks
Up to 2012, the scheme covers only 500,000 farmers which is far from achieving it set goals
To expand Agricultural Sector there is need for involvement of private commercial insurance companies who:
1. Can do business as business on contractual and commercial basis that would give confidence and guaranteeto the institutional lenders to agribusiness value chains
2. Will consider the small, middle and large scale farmers and their families
3. Have capacity to bear the risks and pay claims promptly without any bureaucracy
4. Provide insurance that transcend from farm to the family health and wealth
5. Have adequate risk management mechanisms and professional advisory services.
The Leadway Agricultural Insurance was carefully developed to address these needs.
AGRICULTURAL INSURANCE IN NIGERIA – An Overview
.
Kenya Livestock Insurance
Program
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Marcel Stäheli, Senior Parametric Product ManagerCelsiusPro
CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
Video presentation
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Go to www.youtube.com/watch?v=q4asbUmd8w0
to watch the three-minute video
CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
Kenya Livestock Insurance Program (KLIP)
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National Agricultural Insurance Scheme – Kenya
• The Ministry of Agriculture Livestock & Fisheries in Kenya plans to use insurance to cushion Kenya’s livestock keeping communities against drought related loss of livestock;
• KLIP has been developed with support from World Bank, ILRI1), and public and private sector stakeholders;
• It is a macro-level insurance scheme for asset protection;
• Forage availability as determined by satellite data will trigger payout;
• National government intends to provide (as a start) 100% premium support for 5 tropical livestock units (TLU) belonging to vulnerable pastoralists;
• The insurer and beneficiaries will make arrangements for top up and voluntary cover via IBLI2) program;
• The insuring company will make payouts directly to the accounts/mobile payment systems of the beneficiaries when there is a trigger
1)International Livestock Research Insitute2)Index Based Livestock Insurance
CelsiusPro has set-up a web-based tool to extract and access NDVI data
Login Page to CelsiuPro’s web-based tool
CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
Kenya and Agriculture
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Huge Livestock Wealth
14 target ASAL pastoral counties have
9.140 M cattle= 52.3%
13.462M sheep= 78.6%
21.024M goats= 75.8%
2.962M camels= 99.7%
Map of Kenya showing arid and
semi arid districts
Source: Presentation: Kenya Livestock Insurance
Program by Vincent Githinji (MALF Kenya) 09.06.2015
Program Launch
• 1-Oct-2015
• 2 counties with 26 insurance units
• Cover Period:
Short rain Oct-Feb
Long rain Mar-Sep
• 5,012 farmers covered 1st Cover Period
Program Expansion
• 1-Oct-2016
• 6 counties with 70 insurance units
• Severe drought during short rain Oct-Feb
2016/17
• 88% or 62 of insurance units got triggered
where losses paid to herders in feeding
over 50,000 animals
• 12,064 farmers covered 2nd Cover Period
CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
Technological aspects of KILP
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CelsiusPro is the calculation agent for KILP and therefore responsible of calculating the
NDVI values per Insurance unit used to calculate the risk and the payouts.
Below a screen shot for the selection of the Insurance Units.
Outlined the
Insurance Units of
the first 2 counties
for the KLIP .
It is planned to
further extend the
regional scope to
cover as many as
14 counties.
CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
County Season Progress and Past Conditions
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CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
Insurance Unit Season Progress
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CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
Payout Report
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The official payout
reports are generated at
the end of the season.
CelsiusPro AGSeebahnstrasse 85, CH-8003 Zürich, t: +41 44 205 9910 f: +41 44 205 9919, [email protected]
Questions
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RIICE: Remote Sensing-
based Information and
Insurance for Crops in
Emerging Economy
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Manoj Yadav, Project AdvisorGIZ
Remote Sensing-based Information and Insurance for Crops in Emerging Economy
Application of Remote Sensing Technology
in Crop Insurance
Experience from RIICE project in Tamil Nadu, India
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Using remote sensing information in Crop Insurance
Bi-weekly information on crop growth status, derived by European and Indian cloud-free satellite data
Observation on delays in rice growing helps to guide decision on Preventive Sowing/ On Account Payment Cover
End-of-season yield estimation at village level can guide Crop Cutting Experiments (“Smart sampling”)
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Large scale, high
resolution SAR-
RS of rice areas
Crop models
adjusted by
remote sensing
Smartphone
based rapid data
collection
Cloud platforms
scalable, reliable
and timely+ + +
All remote sensing data stored,
processed and analyzed on the cloud.
All field data collected by mobile phone,
sent to the cloud over mobile or Wi-Fi
network.
Timely, detailed, and accurate information
made available to the users.
Turning the value chain of crop information digital
Leveraging new technologies
Information delivered through remote sensing analysis:
• How much area was planted this season in each
district/block/village?
• What was the yield in each district/block/village?
• Was production more or less than last year?
• Was the harvest early or late?
• Adverse climatic conditions: flood or drought?
– Where and how much area was affected?
– How much yield was lost in such areas?
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Where? Rice area detection and acreage estimation at village level
Rice Map of Kodavasal Block,
Tiruvarur District
Rice Map of Vayalore Village,
Kodavasal Block, Tiruvarur District
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Rice Area in Navalur Kuttapattu village, Manikandam Block, Trichy District
2016-172015-16
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
When? Start of season
Cauvery delta region, Tamil Nadu
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
How much?
Yield estimation at village level
Rice Yield Map of Vayalore Village of Kodavasal Block, Tiruvarur District, Tamil Nadu
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Application of RIICE technology in Crop Insurance in India
Pre Vegetative Phase
Vegetative & Reproduction
Phase Maturity Phase
Prevented/Failed Sowing
On Account Payment
CCE Based Compensation
Start of Season & Early Rice Area
Maps
Mid Season Yield Forecast for
Expected Yield
End of the Season Yield Estimates &
Smart CCE Sampling
Crop Growth Stage V
illage level Imp
leme
ntatio
n
Crop Insurance Scheme Features
RIICE Based Crop Insurance Solutions
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Information delivered by RIICE and its national partner Tamil Nadu University, helped relief efforts by distributing seeds in Tamil Nadu flood affected areas, after satellite data had been delivered to the state level emergency authorities.
2015 Tamil Nadu flood resulted in loss of rice area being lost
Case Study: Disaster Risk Assessment
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Role of RIICE Technology in Crop Insurance in India
Area of improvement RIICE
In-season crop area monitoring & yield estimation
Determination of progress of area sown/emerged
Continuous monitoring of crop health
Efficient identification of homogenous/stress areas
Disaster mapping and loss assessment (Flood & Drought)
Prevented sowing cover and on-account payment
Improved targeting/ Smart Sampling of Crop Cutting
Experiments
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
Mar-Apr 2016
• RIICE project presented to the, Dept. of Agriculture, Govt. of Tami Nadu
• Dept. of Agriculture recommends RIICE project to be piloted in the 2016 season
July 2016
• RIICE project mentioned as one of the pre-conditions for selection of insurance companies in the Tender Process
Nov 2016
• RIICE project approved by Committee on Crop Insurance for a state wide pilot
• RIICE-team observes late start of season using satellite technology, shares information
Jan-Mar 2017
• Department of Agriculture analyses satellite information on delayed start of Samba season
• Stakeholders consider RIICE based information for insurance pay-outs
• RIICE Pilot extended in 2017 cropping season
RIICE Milestones in Tamil Nadu, India
REMOTE SENSING-BASED INFORMATION AND INSURANCE FOR CROPS IN EMERGING ECONOMIES
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text.
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Summary of experiences and challenges ahead
RIICE Project
Tamil Nadu
2016-17
Products Problem
Solving
Contribution to
Crop Insurance
Challanges &
Future Focus
Areas
• Start of season area maps
• Village wise rice area
• Mid season expected yield
• End of Season yield maps
• Village level yield estimate
• Disaster Risk Assessment
• Field validated products
• World class technology &
expertise
• Timely, scientific transparent
& efficient processes
• Insurance ready solutions
• RIICE Insurance pilot by
State Govt.
• Area discrepncy
• Rapid loss assessment
• In season monitoring
• Village level crop statistics
• Mid season & End of
season yield assessment
• Timely compenssation to
farmers
• Detailing PMFBYfeatures like
prevented sowing, on a/c
payment etc
• Developing a Smart CCE
sampling methodology in
cooperation with DEA
• Availability of quality village
level boundary maps
Thank You
Manoj Yadav
RIICE Project Advisor, GIZ, New Delhi
Email: [email protected]
Mobile: +91-9971784600
Where can technology best leveraged forinsurance:
1. Data and information gathering
2. Reaching out to clients and improving theexperience of insurance
3. Improve processes to reduce costs
Audience poll 2
40
Making inclusive insurance work:
Agriculture and climate risks
41
Presenter:Manoj Yadav
Project AdvisorGIZ
Facilitator:Miguel Solana
Senior Technical Officer,Impact Insurance Facility
41
Presenter:Marcel Stäheli
Senior Parametric Product Manager
CelsiusPro
Presenter:Samson Ajibola
Head, Agricultural and Micro Insurance
Leadway
Q&A
The way forward
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Importance to understand all the household risk dimensions that climate change is triggering
Integration to adaptation mechanisms will be essential for insurance to be sustainable
Leverage technology solutions and foster partnerships
Our next webinars
43
Making inclusive insurance work - A webinar series by the International Labour Organization’s Impact Insurance Facility and UN Environment’s
Principles for Sustainable Insurance (PSI) Initiative
The topics and schedule of the next webinars are as follows:
6. Health – Part 2 – date TBA
7. Insurance regulation – date TBA