Developing agricultural insurance products for smallholder farmers

Although agricultural insurance can significantly increase the resilience of smallholder farmers and their households, most of them are not covered in the event of crop failures and livestock losses. The SSNUP programme therefore encourages the development of agricultural insurance products by co-funding several projects. 

For example, a project by Incofin is underway in Bolivia, which aims to develop agro-climatic insurance to reduce the climate risk in the agricultural portfolio of a microfinance institution. The project also has the broader objectives of raising awareness of climate risks and paving the way for agricultural insurance partnerships in Latin America and the Caribbean. 

Meanwhile, a project by Oikocredit is supporting an insurance broker specialised in agricultural index insurance in increasing its outreach in Burkina Faso, Ivory Coast, Mali and Senegal. In addition to developing additional products, the project aims to build the capacity of all the stakeholders, from end clients to aggregators/distributors and insurers. A digital subscription, policy and claims management platform is also being implemented to facilitate outreach into rural areas. 

Workshop identifies key factors of success 

In November 2022, the SSNUP coordinator ADA organised a workshop for programme stakeholders to discuss challenges and best practices with a view to facilitating the development of insurance solutions for smallholder farmers. The workshop, which was facilitated by an agricultural insurance expert from the International Labour Organisation (ILO), agreed on the following key factors of success: 

• New technologies accelerate the scale-up of insurance solutions. 
• The business model must be customer-centric to bring value for the customers while also ensuring viability and profitability for insurers. 
• The advantages of being insured becomes more tangible for smallholders when it is bundled with other products or services such as meteorological predictions and agricultural training. 
• Aggregators such as input suppliers, MFIs, cooperatives, farmer associations and processors can leverage their direct contact with farmers in remote areas and act as intermediaries to bring greater scale and outreach.
• Financial training for farmers and clear communication throughout the client journey help them understand how insurance works and builds trust.