value for farmers from meso‐level index insurance!?

Value for farmers from meso‐level index insurance!?

Presentation for the ‘7th Annual International Microinsurance Conference’, Rio de Janeiro, 9 November 2011

Micro Insurance NetworkAgriculture Insurance working group

K lij M i kKarlijn MorsinkRoland SteinmannMangesh PatankarThérèse Sandmark

Gaby Ramm

Value for farmers from meso‐level index insurance?

Preliminary definition Meso‐level Index Insurance (MLII):

MLII id tf li t t hMLII provides a portfolio or group cover to an aggregator, such as a Financial Service Provider, Farmers’ association, input supplier, local government or NGO, based on an index. In turn the aggregator t il it b fit t f th h i t f i (H ll tretails its benefits to farmers through a variety of services (Hazell et

al. 2010)


Macro – Meso – Micro ‐Government Aggregators Farmers

Cover for national

Cover for budgetary

issues due to

Cover for income loss

national calamities

issues due to regional calamities

due to farm level hazards


Questions to be adressed:Questions to be adressed:

• How are current meso‐level index insurance schemes organized?

• Do they offer value to farmers and if so what value do they deliver and how has this value been delivered?

Value for farmers from meso‐level index insurance!?

Why attention for MLII now?Why attention for MLII now?

• Realization that micro index insurance has its challengesRealization that micro index insurance has its challenges

• Recent emergence of (a trend) a variety of meso‐level solutionsg y

• Questions about potential for value to farmers


Potential solutions of MLII to micro index insurance problemsPotential solutions of MLII to micro index insurance problems

• Lower admin costs?

• Lower basis risk?

L li d b ild d d ?• Less complicated to build trust and to educate?


Potential value for farmers from MLII?Potential value for farmers from MLII?

• Direct benefits: Value for the farmer that is derived directly f h i t i lt l i d tfrom having access to an agricultural insurance product:

• Ex‐ante and ex‐post effects.

I di b fi O h h i d fi• Indirect benefits: Other, such as increased access to finance, innovations or competition (often as a consequence of lower operating costs of the aggregator)


Nine MLII programs we were able to identify

Gh GIZ d Gh I A i ti•Ghana: GIZ and Ghana Insurers Association•Philippines: Microinsurance Innovations Program for Social Security (MIPSS)B ki F Pl G d Alli Af i•Burkina Faso: Planet Guarantee and Allianz Africa•Mali: Planet Guarantee and Allianz Africa•Mexico: Agrosaemex (discontinued)

( )•Haiti: Microinsurance Catastrophe Risk Organization (MiCRO)•India: BASIX (Discontinued. Perhaps the oldest meso‐scheme)•India: DHAN foundation, People Mutuals and Agriculture Insurance Company of India•India: Pioneer Seeds and ICICI Lombard (discontinued)

OTHERS: Vietnam, Bangladesh (never took off, product design)


You being a specialized audience, are you aware of other meso‐level index insurance intiatives?


Until now identified categories include

Insurance combined with farmer input

product

Insurance of aggregators’ portfolio

Insurance of farmer output (crops)

f.e. Pioneer d d f GIZ d

f.e. DHAN foundation, P lseeds and

Weather Risk Management Services

f.e. GIZ and Ghana Insurers

Association

People Mutuals and Agriculture InsuranceServices,

IndiaAssociation Insurance

Company of India


P i d I d Cl i A t /Period Index Type

Claim history

Aggregator / Delivery ?

Ghana IIPAC 2011 ‐ Weather none Bank’s loan portfolio

Philippines MIPSS 2011 Area yield none Farmer association

Burkina Faso 2011 Satellite none Farmer association

Mali 2011 Satellite and Area yield

none Farmer association

Haiti MICRO 2011 Weather yes MFI

India Pioneer S d

2008 Weather none Seed companySeeds

India Basix Weather MFI

India DHAN 2009 Weather yes Farmer associationIndia DHAN 2009 Weather yes Farmer association


Program history and context

• 5 started only this year 1 in 2008• 5 started only this year, 1 in 2008

• No sustained premium subsidies envisaged

• Several discontinued

2 h l d l i t d i i t k• 2 have already claim payouts and increasing uptake

• Three reasons for venturing into MLII: 1 E t i k t ith l l l f i lt i t ti1. Entering markets with low levels of agriculture insurance penetration 2. Lowering existing insurance premiums by diversifying risk.3. Protecting loan portfolio


Observed kinds of direct value for farmersObserved kinds of direct value for farmers

During Calamity:C h t / d d b d i t t•Cash payouts/reduced burden on input costs•Outstanding loan balances cancelled

I G lIn General:•Secured access to banking


Indications of indirect value for farmersIndications of indirect value for farmers

•Expanded agricultural loans

•New loans after default

•Emergency loans

•Increased competition among aggregators.p g gg g

•Increased access to insurance and other products.


Main conclusions:Main conclusions:

• Up to now a variety of three distinct types of MLII identified for different purposes, fitting to the characteristics of the insurance market

• Innovative ways of offering direct and indirect value through variety of channels


Discussion:Discussion:

• Is only indirect added value (protecting of aggregator) enough?

• Is spreading of basis risk over a larger pool a sustainable insurance solution?

• Is the observed shift from micro to meso leading to reduced need for subsidies for insuring agriculture risk?

WE ARE THANKFUL TO:

Maria Victoria Saenz‐Samper, IADBMaria Victoria Saenz Samper, IADBRichard Leftley, Microensure

P Gunaranjan, (Ex‐employee ‐ BASIX), UCWeather Risk Management Services IndiaWeather Risk Management Services IndiaVenkatram Vasantavada, Pioneer Seeds

Harini Kannan, Swiss ReCentre for Insurance and Risk ManagementCentre for Insurance and Risk Management

Mr. Balasubramanian, People MutualsMr. Vasimalai, DHAN foundation

GIZ GhanaGIZ, GhanaGhana Insurers AssociationPranav Prashad, ILO‐MIFA H ti F kAnne Hastings, Fonkoze

Dr. Antonis Malagardis, GIZ PhilippinesMathieu Dubreuil, Planet Guarantee

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value for farmers from meso‐level index insurance!?

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