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MI in Ethiopia NYALA’s Experience 2007-2110

MI in Ethiopia NYALA’s Experience 2007-2110. NISCO - pioneer in both MI products -Traditional Crop Insurance (MPCI) & WEATHER INDEX INSURANCE (WII) MPCI-1 st year 120,2 nd year827,3 rd year 1096….. WII is still in laboratory stage – (pilot project being scaled up)

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MI in Ethiopia NYALA’s Experience 2007-2110

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  1. MI in EthiopiaNYALA’s Experience 2007-2110 • NISCO - pioneer in both MI products -Traditional Crop Insurance (MPCI) & WEATHER INDEX INSURANCE (WII) MPCI-1st year 120,2nd year827,3rd year 1096….. WII is still in laboratory stage – (pilot project being scaled up) • 1st year 337, 2nd year 2044 clients…

  2. Why MI? Problem Statement low income HHs • had no access OR • ignored by regular insurance Scheme • cover for them was not a welcome idea by insurers -

  3. Risky Business? • Insurance for low income - unsafe • Low income people - high risk - Have nothing to protect - Unprofitable - Unmanageable…

  4. Insuring poor ? • This is being recognized rapidly by - Government, - Donors - NGO - Private sector insurance works for poor If designed with the poor in mind

  5. Definition of MI • Protection of low income people against specific peril/s inexchange for regular premium payments Proportion to the likelihood & cost of the risk Premium on: full picture of the risk

  6. MI Covers risks to RURAL & URBAN - Health - Life - disability (breadwinner) - MainlyProperty like crop, livestock…

  7. Actors in MI • Unlike microfinance, -oftenmultiple partners involved in implementing MI program - Framers, Unions, Cooperatives… - Metrology office, research institution - NGOs Local & Intern’l(AMEFI,REST,WFP,OA,IFPRI,WB), Donors, - Gov’t, Organizations - MFI, Insurers, Reinsurers…

  8. Micro insurance types Many schemes are - relatively younger or - Some in the experimental phase • Many show great promise & innovation • so called (1)Traditional Insurance (Indemnity)

  9. Micro insurance types • Indemnifies only clients suffer actual loss (principle of Indemnity) • Compensation is based on the extent of each & individual loss (2) Index based Insurance - introduced recently in the market - individual compensation is based on ‘the formula’, not on actual loss

  10. Indemnity based… • Submits corresponding payment • Payout on magnitude of loss - relatively accurate payouts • Others entail higher admin. Cost Eg. Motor insurance F&L insurance Multi peril crop insurance…

  11. Index Based Insurance • Relatively new concept • is alternative to Traditional Crop Insurance Program • Financial risk transfer INDEX refers - the Insurance is based on an objectively verifiable measure

  12. Index Based Insurance… • Measures • Specific weather variable • At a specific weather station - Over a defined period of time Measurable event is proxy for loss • Index Insurance Specifies - values allow payouts to be made

  13. Weather Index Insurance • Weather is the INDEX it is objectively measurable • Payment - according to whether, - reached certain predetermined thresholds of the weather - Weather index is that highly correlated with the particular risk adequately reflects losses

  14. WII… • Weather INDEX Ex. - rainfall (excess, drought) - uses data from rain gauges near the farmer’s field. - If the data shows the rainfall amount is below the threshold, the insurance pays out. (drought Index) - Rather than payment on actual loss -

  15. WII… Other Weather Indices - temperature, - humidity - crop yields, - flood…

  16. Cattle Insurance (Indemnity,2011) The cattle includes a. Milk Cows b. Calves/Heifers c. Stud Bulls d. Bullocks(castrated bulls) whether indigenous, exotic or cross-breed. Note : • Exotic animal means an animal, whose both parent are foreign breed. • Cross-bred animal means an animal, one of whose parents is foreign breed We Care We Protect

  17. Age-group We Care We Protect

  18. Insurance Coverage The policy gives indemnity for death of animals due to • accident • illness and disease (including epidemic diseases) • smoke, fire, lightning • windstorm We Care We Protect

  19. Thank you for your attention Nyala Insurance S.C. 0116626667/180491/0911337601 b.demelash@yahoo.com

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