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INDEX INSURANCE FOR LIVESTOCK IN THE IGAD REGION – ADDIS, ETHIOPIA 24 th to 26 th JUNE 2019

KENYA LIVESTOCK INSURANCE PROGRAM (KLIP) Lessons learnt from implementing index based livestock insurance – Implementers views. INDEX INSURANCE FOR LIVESTOCK IN THE IGAD REGION – ADDIS, ETHIOPIA 24 th to 26 th JUNE 2019. Richard Kyuma, PhD., OGW KLIP Program Coordinator.

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INDEX INSURANCE FOR LIVESTOCK IN THE IGAD REGION – ADDIS, ETHIOPIA 24 th to 26 th JUNE 2019

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  1. KENYA LIVESTOCK INSURANCE PROGRAM (KLIP)Lessons learnt from implementing index based livestock insurance – Implementers views INDEX INSURANCE FOR LIVESTOCK IN THE IGAD REGION – ADDIS, ETHIOPIA 24th to 26th JUNE 2019 Richard Kyuma, PhD., OGW KLIP Program Coordinator State Department of Livestock

  2. Justification for Livestock Insurance • Kenya is vulnerable to frequent and extremely expensive natural disasters; • High frequency of drought (every 2-4 years); • 2008 - 2011 PDNA: Total drought losses to Kenyan economy: KShs 968.6 billion and reduction of GDP by 2.8% each year. 72% of this loss is related to livestock; • Severe droughtscausesmorethan 15% mortality of livestock;

  3. KLIP Design • Designed to use forage availability as determined by satellite data - Normalized Difference Vegetation Index (NDVI) to derive an insurance product; • Following the successful piloting of ILRI designed IBLI • Currently the National government provides 100% premium support for 5 tropical livestock units (TLU) for each vulnerable pastoralist; • The insuring company makes payouts directly to the accounts of the beneficiaries when there is a trigger. • World Bank and ILRI provide technical support

  4. Use of Satellite Data (NDVI) INDEX COMPUTATION Temporal aggregation Spatial aggregation MODIS NDVI image (10 day) March-September Temporal aggregation 1-10 May 2011 Normalization Cumulative Seasonal NDVI Seasonal forage scarcity Source: ILRI IBLI team

  5. KLIP Coverage • 8 ASAL Counties under KLIP • Turkana, Wajir , Marsabit, Isiolo, Tana River, Mandera , • Garissaand Samburu

  6. KLIP Progress and Achievements • Period of insurance cover 2015 to 2019 (4 years) • Currently implementing a fully subsidised KLIP product. • 5 TLUs insured for every beneficiary. • 18,000 households covered and 120,000 people benefit annually • Kshs. 706 Millions - Premiums paid by GoK to date • Kshs. 790 Million - Insurance payouts by insurance companies • 90,000 TLUs protected annually valued at Kshs. 4.5Billion

  7. A Public private partnership Roles of National and County Governments • Creation of conducive policy and business environment; • Coordination • Resource mobilization; • Capacity building of stakeholders; • Private sector mobilization; Technical support provided by World Bank and ILRI

  8. County Governments • Extension/outreach services; • Data collection and management; • Selection of insurance beneficiaries; • Aligning programs to complement livestock insurance. • Role of Private Sector/Insurers/Reinsurers • Provision of Insurance cover • Awareness creation, Marketing, Recruitment of voluntary cover • Disbursement of payouts.

  9. GoK KLIP Investment plan upto 2022– under Big Four Agenda

  10. KLIP Outcomes/Impacts • Beneficiaries Empowered to access to animal feed/fodder during droughts • Enhanced access to water for animals during drought periods • Improved access to vet services after payouts • Pastoralists saved from loss of animals • Overall improvement in pastoral drought disaster mitigation and stabilization of production systems.

  11. Challenges • Low funding levels • Low awareness creationand capacity building levels • Beneficiary data management – (manual registers) • High premiums • Slow payout pathways

  12. Lessons learnt • Need to grow insured numbers for commercial case and sustainability • Smart Subsidies • Efficiency in pay-out transfers • Graduation of beneficiaries (full subsidy-partial subsidy-commercial products) • Development of complimentary programs – fodders banks, water tracking, vet services. • Encourage Counties to invest in KLIP

  13. Way forward • Going forward: Voluntary insurance services • Partial subsidies to Fully Voluntary/commercial products • Public education, awareness creation and capacity building – public good • Establish a livestock insurance electronic system for data management; • Development of Livestock insurance Policy andimplementation strategy • Develop local capacities in calculating agent services • Continuous research for product fitnes

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