Innovative livestock insurance scheme for remote Kenyan herders was dreamed up at Cornell

Jimmy Smith, director general of the International Livestock Research Institute (ILRI), speaks at an event in Marsabit town, in northern Kenya, where several hundred livestock herders were given payouts for livestock insurance that they took out earlier (photo on Flickr by Neil Palmer/CIAT).

‘In the midst of a drought-induced food crisis affecting millions in the Horn of Africa, an innovative insurance program for poor livestock keepers made its first payouts Oct. 21, providing compensation to some 650 insured herders who have lost up to a third of their animals in northern Kenya’s vast Marsabit District.

‘Known as Index Based Livestock Insurance or IBLI, payouts are triggered when satellite images show that grazing lands in the region have deteriorated to the point that herders are expected to lose more than 15 percent of their herd. The current readings for which indemnities now being paid show that between 18 and 33 percent of livestock have been lost to drought this season.

‘The insurance project was developed in partnership between Cornell and the Nairobi-based International Livestock Research Institute and the Index Insurance Innovation Initiative program at the University of California-Davis; it was first launched in 2010 in Kenya’s northern Marsabit District.

‘IBLI was initially developed at Cornell in a series of collaborations between Chris Barrett, the Stephen B. and Janice G. Ashley Professor of Applied Economics and Management and professor of economics; Andrew Mude, Ph.D. ’06, IBLI project leader at ILRI; and Sommarat Chantarat, Ph.D. ’09 . . . .

‘The payments are being dispatched in the middle of a humanitarian crisis endangering 12 million people in the Horn of Africa.

‘”This is a wholly privately funded product. Indeed, the insurance company and reinsurer have made a little money on this product even with a payout within 18 months of product launch,” said Barrett.

‘Commercial partners Swiss Re, Equity Bank and UAP Insurance Ltd. implement the program. The IBLI project is funded by USAID, the European Union, the British Government, the World Bank, the Microinsurance Facility and the Global Index Insurance Facility.’

Members of the local community discuss the first-ever livestock insurance payouts that were made in Kenya’s northern Marsabit District (photo on Flickr by Neil Palmer/CIAT). 

Read the whole article at Cornell University’s Chronicle Online: Drought-stricken Kenyan livestock farmers receive first insurance payouts, 27 Oct 2011.