Farmers in the eastern, drought hit province of Kenya are benefitting from a microinsurance program which sold them weather-index insurance. The insurance policies pay out based on actual weather conditions making them particularly suitable to the developing world where education about how the claims process works can be difficult.
The insurance product from APA Insurance Company has been well received by farmers who purchased it and it’s hoped that the experience of making a claim will be positive so word of mouth helps the product knowledge spread to more areas.
APA CEO Ashok Shah said: “The farmers who are receiving payouts today do not own large scale farms, but the earnings from the farms contribute to their livelihoods. Our payout system is calculated and disbursed quickly without the need for lengthy claim processes as it is based on publicly observable indexes rather than yield inspection on the farmto qualify claim.”
Equity Bank (who help APA sell the product) CEO and Managing Director Dr. James Mwangi said: “Due to the unpredictability of the weather especially in ASAL areas, weather based insurance offers the best protection for farmers against possible crop loss. Ultimately, we hope to enlist more farmers in areas prone to drought to take up crop insurance as cushion against crop loss from severe weather.”
Weather data for determining claims is collected online from weather stations which were donated by The Rockefeller Foundation. In this case a lack of rainfall triggered the claims on the policies.
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