SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

Insuring Farm and Family: Innovative Risk Management

Strategies in Developing Markets

Transferring risk to Increase Smallholder Investment

SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

Rain Index Insurance in Senegal

Jean-Michel Voisard, Chief of Party, Feed the Future Senegal, Naatal Mbay, Engility

The FEED THE FUTURE SENEGAL NAATAL MBAY PROJECT

SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

Implemented by

60,000 Households to dateAn objective of 150,000

A Value Chain project targeting small cereal farmers through private sector driven systems.

Cereal crops: Rice, Maize and Millet

Technologies: Seeds and Best production/ post-harvest practices, Contract facilitation and Market linkages, Financial services. The Southern zone agriculture systems are rainfed: adoption of new technologies is directly linked to access to finance and mitigating the rainfall risk.

IRRIGATED RICE

RAINFED CROPS

Senegal rain index insurance Program• Launched in 2012 – currently in its 4th season• Maize, Peanut, Millet, Upland Rice• Rainfall risk coverage: input loan reimbursement• Crop specific indices for 6 specific zones based on minimal

seasonal rainfall requirements. • Insurance cost to farmer is 4.5% to 16.0% of insured capital

depending on rainfall risk in the zone• Premium rates include a 50% government subsidy• Three rainfall triggers over total crop cycle • Sowing phase trigger: 30% of insured capital indemnity • Growing phase triggers: 80% of insured indemnity indemnity

SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

Technology• Rain gauges equipped with

automated dataloggers• Coverage radius: 7.5 km• 51 rain gauges installed to

date = 9,000 sq km• Manual rain gauges

managed by participating farmer groups

• Data collected by National Meteo Agency

• CNAAS: Senegalese Agricultural Insurance Company – a Public Private Joint Venture

• PlaNet Guarantee Senegal: Technical partner and broker services to CNAAS• ISRA : National Agriculture Research Institute technical oversight of Index

development• ANACIM: Senegalese Meteo Agency validates rainfall reports • RE-INSURERS: SEN-RE, SWISS-RE, NCA-RE validate premium structure and re-

insure at a regional level• BANKS and MFIs: Issue loans to farmers and ultimate beneficiary of indemnity• Farmer organizations: Coordinate farmer loan applications and premiums • Ministry of Finance: Division of Insurance

SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

Implementing partners

• Installation of Rain Gauges• Definition of index for new crops

and expansion zones• Pre-season sensitizations by

farmer organizations and PlaNet Guarantee

• Premiums validated by re-insurers prior to marketing phase

• Farmer groups coordinate insurance marketing with loan application process

• ANACIM produces certified rainfall logs to CNAAS and re-insurers

• Claims calculated by CNAAS and PlaNet Guarantee

• Claims settled within 4 months of harvest

• Debrief with partner farmer organizations and banks

RESULTS TO DATE

SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

24

611

1471

3087

12 13 14 15

Rice

Milet

Maize

Total rural households inRainfed production zones:

+200K

2015 Program:3087 producers (608 women)3945 Ha$ 70,000 premiums$ 500,000 Insured Capital

2012-2014 Programs:2106 policies$ 56,000 premiums$ 52,000 indemnities (99% paid out in 2014 drought)

Participating farmers

Scaling strategy• Breakeven point is estimated at 100,000 farms or a penetration rate

of 50% of the region’s households• Early premium validation and improvement of farmer led distribution

system will accelerate adoption• Integration of rain index insurance to mainstream agricultural lending

by banks and large MFIs• Increase of geographic coverage in automated rain gauges: 250 rain

gauges - $1 million investment• Integration of grassroots savings and loans and women’s savings

groups• Adaptation to very small scale lending for women rice farmers on less

than 0.5 ha• Diversification to Cotton crop to cover full rain fed portfolio

SEEP Annual Conference 2015Inclusion and Resilience: The Next Challenge

Lessons learned and way forward• Synergy: the insurance program gains from multiple synergies from being

a component of a value chain program with a multi-level risk reduction strategy

• Entry point: The product is well understood by farmers that are part of structured groups producing with at least 30% marketing objective.

• Distribution strategy: Connection to pre-existing crop aggregation and credit distribution networks (farmer groups or banks).

• Technology buy-in: Farmers need to be able to validate the rainfall data themselves using manual rain gauges controlled by their own membership

• Building trust: Sensitisation and debriefings by Insurance company are key

• Cost effectiveness: working relationship with the Meteo agency • Competitiveness: Potential for competing models• Sector support strategy: Capacity for Government to maintain subsidy

levels at scale?