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Strengthening Livelihoods: The Role of Insurance in Agricultural Resilience

Explore how insurance enhances the livelihoods and resilience of smallholder farmers through risk management, poverty reduction, and food security. Discover the impact of innovative agricultural insurance products and initiatives in improving access to finance, increasing productivity, and fostering greater resilience against natural disasters and climate challenges.

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Strengthening Livelihoods: The Role of Insurance in Agricultural Resilience

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  1. Setting the scene: How insurance contributes to better livelihoods and disaster resilience for smallholder farmers • Singapore

  2. A CORE motivation More people have better access to quality insurance

  3. And in agriculture … specifically …. RISK: Farmers understand and manage risk every day. Agriculture is risky. Small holding farming is risky. Many farmers live in high risk exposed areas. POVERTY REDUCTION: Better farm incomes means reduced poverty in countries where farming is a significant part of economic effort and has a large number of small holders involved. FOOD SECURITY: Resilience in farming is a key to national and global food supply and security. RESILIENCE: Many national and local exposures to natural disasters include high exposures in agriculture. “You can’t eat the view”

  4. How does insurance help?

  5. Especially in Agriculture • It works in practice, we’ve seen it • It is not so easy to do, however, especially to • Get the risk service delivered • Get the finance service delivered • Achieve scale • Make all of the insurance, finance, input and market options accessible, affordable and honorable • Access to finance • Increased productivity • Higher farm incomes • Greater food security, food nutrition • More resilient farmers and more resilient governments in response to natural hazards and climate challenges • Everybody wins

  6. Innovations in agricultural insurance • Product: Indemnity and index based insurances • Subsidies • Links to input, output and other risk management related initiatives • Pilots and more pilots Index based insurance initiatives originally motivated by desire to reduce cost of insurance through avoidance of moral hazard risk and need for claim assessment

  7. Index-based Insurance at the IAIS • Some key issues for the paper under development: • Formality • Definition of insurance, insurable interest • Supervising pilots • Encouraging innovation, applying proportionality in practice • Working toward the end game • Consumer protection • Financial and insurance literacy with a complex product • Dealing with basis risk • Competition policy

  8. Conclusion • Are we there yet?

  9. THANK YOU! • Craig Thorburn • Lead Financial Sector Specialist • Email: cthorburn@worldbank.org • Phone: +1-202-446-6826 • @ThorburnCraig

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