Here’s another example of the successful application of parametric weather-index based insurance techniques in developing economies. Insurer Jubilee Insurance recently made payouts under their weather index insurance scheme to over 200 cotton farmers in Baringo County, Kenya for their losses suffered after crops failed due to a lack of measured rainfall.
The payments were made after the satellite data used to define whether the weather index insurance policies have been triggered showed that areas within the region had not received sufficient rainfall to enable farmers to achieve expected crop yields.
The product is part of an expanding pilot scheme that Jubilee have been running in Kenya. They hope to expand it to cotton growers around the country. “This product is part of Jubilee’s efforts to expand its micro insurance and crop insurance, using technology as a medium that best delivers to low income earners,” said Jubilee Insurance Kenya CEO Patrick Tumbo.
The payment is made via an organisation who help to finance the farmers, continuing the trend for microinsurance to be linked to small business loans and microfinance schemes. This enables farmers who have received assistance to continue operating rather than their loan repayments bankrupting their businesses.
Satellite technology monitors rainfall data in the region and automated triggers notify the insurer that payments are required if rainfall falls below pre-defined levels. This enables fast payouts and makes the products easier to understand and roll-out than indemnity based insurance.
The Jubilee Insurance cotton pilot is reinsured by Swiss Re.