PPP MODEL OF INSURANCE IN AFRICA

Contents1.The Challenge2.Our Solution3.Partnerships4.Product Portfolio5.Sales and Distribution Channels6.Growth and Sustainability in Outreach

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Kilimo Salama links farmers to insurance, empowering them to invest in their farms.Kilimo Salama is a social enterprise incubated by the Syngenta Foundation for Sustainable Agriculture, Kenyan Insurer UAP and co funded by the IFC managed Global Index Insurance Facility .

Our team has developed a range of products, already insuring over 100,000 farmers in 2013 in Kenya and Rwanda.

This is why we use index insurance: insurance that helps farmers cope with climate risks and does not require farm visits.

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Kilimo Salama approaches insurance from a farmer perspective

Large scale farm: $1000 Premium - $50 Visit Costs + $950, insure

vs.Small scale farm: $10 Premium - $50 Visit Costs - $40, can’t insure

1. The ChallengeA bad season affects a farmer’s livelihood. During one bad drought season, a smallholder farmer can loose their entire harvest and lack

the money to buy quality farm inputs the next season. A hard working, food sufficient farmer can become reliant on handouts simply because it

didn’t rain at the right time. Traditional agricultural insurance has not been able to protect small holder farmers as it

relies on farm visits to assess losses.

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2. Our Solution a. We approximate farmers’ production risk using a range of data sources

b. We package insurance with credit, improved farm inputs, agronomic training, marketing contracts through support of partners

c. We make it understandable by simplifying a complex product and the process of acquiring insurance for farm investment.Crops covered: Maize, Beans, Wheat, Sorghum, Coffee, Potatoes,

4. Product Portfolio

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1. Weather Index - Rainfall Index and Satellite Index2. Area yield Index

Rainfall Data + Agronomic Model

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5. Sales and Distribution

1. Retail Channel – Individual farmer purchases the insurance from Agro-vets, sales agents, Use of Mobile

phones to register, Use of mobile money transfer to receive compensation.

2. Group Channel – Use of bundling approach. Credit linked product through MFI’s, Banks, Agribusinesses

Eg OAF, Seed growers, coffee cooperatives, Replanting guarantee

6. Growth & Sustainability in Outreach

March 2009 Syngenta Foundation launches the first pilot and the project collects first 18 ksh

of premium

2010 our first 8,000 farmers Ag-credit insurance

2011 our first 20 contracted farmers

through an Agribusiness

2012 Expanding to Rwanda with 20,000 farmers after 2 seasons

2013 Half year shows 100,227 farmers insured and 53% of Target Premiums

realised

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Our growth has relied on partnerships with organisations that can offer both small scale and large scale farmers a package + insurance:

3. Partnerships

These partners fall in the following categories:

1.Agribusinesses e.g Kenya Seed Company, Syngenta, Tropical Farm Management, SeedCo, MEA2.Banks and Ag MFI e.g One Acre Fund, Equity Bank, and local Sacco’s3.Mobile Network Operators e.g Safaricom, MTN4.Government Departments: Ministry of Agriculture, Meteorology department,5.Universities, Research institutions: KARI, CRF, ILRI, Columbia university, U.S.A6.Insurance and Re-insurance companies: UAP, SORAS, Swiss-Re, Africa-Re, Kenya-Re

+

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ClipSee KS farmer experience 9

7. Key Lessons

Access barriers Critical success factors

Legal and Regulatory framework in different regions. The need for non traditional approach required

Client driven product development process

Reliable historical weather data not readily available in all areas

Properly identified distributional channel that would ensure farmer access

Lack of strong regulated value chains and/or farmer organization in some expansion countries

Experimentation in training models and marketing forums

Negative perceptions to insurance from past experiences

Innovation hub made of a team from diverse fields eg agriculture and insurance fields (Agronomists, Actuaries, Education and Extension, Satellite and automated weather stations technologies)

Restrictive in coverage of weather stations Good partnerships with local governments and agric custodians/stakeholders

1010See KS farmer experience 10

Index Insurance works best as a package