While conducting a survey commissioned by the organisation Clim-Eat on why there is a low uptake of agriculture insurance in Kenya, researchers Wiebe Smit and Kevin Gitau make key discoveries.
Though there are many well-priced products in the market, few farmers are willing to sign up for them because the products are not in sync with the realities on the ground.
“Counties face different climate-related hazards, yet most of the insurance products appear to take a one-size-fits-all approach,” says Smit, a policy and impact innovator.
In the event of crop failure, insurers rely on the weather index to determine who deserves a payout. However, this approach often results in errors. While there may be rain in an area, the index may fail to take into account that some regions have huge vegetation cover which may prevent enough rain from getting to the crops.
“We published our findings but felt it was not enough to produce reports that would be read and acted upon, leaving farmers grappling with the same problems they had outlined,” Gitau says.
The researchers, therefore, partnered with organisations like the German Agency for International Cooperation (GIZ) and ACRE Africa, to come up with solutions that would address the issues raised.
For a start, the partners have settled on Makueni, Nyandarua, Nandi and Isiolo counties to pilot the solutions.
They rolled out a solution that leverages satellite technology to measure the amount of rain specific areas received in Makueni and Nandi.
Using this technology helped reduce the number of physical visits the partners had to make to the field. It also helped generate accurate information on the amount of moisture in soil at individual plots.
“In a county like Makueni, one plot could experience rainfall, while another just a short distance away, remained dry. Using a weather index for insurance in such an area leads to inequity,” Gitau says.
Compared to countries like India, the uptake of farming insurance in Kenya is very low. Fewer than one per cent of farmers are insured.
To encourage uptake of the products, the partners opted to give incentives to farmers, with GIZ covering part of the premiums.
At the same time, Clim-Eat and ACRE Africa ensured farmers whose yields were affected by limited or excess moisture in the soil received payouts to enable them to bounce back fast.
Insurance penetration rate
“Farmers avoid insurance because they have heard of others not getting payouts even after their crops failed. They think insurers are fraudsters who get their money and leave,” Gitau says.
The partners would also work on ensuring that once triggered, the payouts would be disbursed quickly to enable the farmers prepare for the next season early.
“Timing is crucial in agriculture. Farmers told us they had waited for nine months to two years to receive payouts. Some had even forgotten that they took the insurance,” Smit says.
“When payouts come after the rains, farmers cannot use the money to buy inputs for the next season. Though some of the farmers who adopted our solution reported receiving less than what they had expected, they appreciated that disbursement was timely.”
The partnership has been on in one planting season. Out of 1,800 farmers been sensitised about insurance in Makueni and Nandi, the organizations have signed up 305 to the solution, with 289 being in Makueni.
“Our goal is 10,000 farmers but that is not easy because of trust issues. We are working with village-based farmer champions to share knowledge on insurance works,” Smit says.
The knowledge shared centres around the appropriate time to sign up for a particular product, why some farmers may receive smaller payouts than others and why they should consider insurance not as an investment but as a safeguard against any eventualities.
“Insurance is technical and relatively new to many farmers. Some think once they buy insurance, they are guaranteed to get all their money back. Others feel they should get more than what they pay, not knowing that if one receives a big payout, it means they have encountered huge yield losses,” notes Gitau.
In addition to farmer champions, the partners work closely with the respective devolved governments as these are trusted by the farmers. The aim is to increase the reach and scalability.
“There have been cases of some organisations coming in the guise of helping farmers, but leaving as soon as they get what they want,” says Makueni County Agriculture Director Mary Muteti.
“Before any organisation starts promoting solutions, we recommend that it passes through our office for vetting and share reports to enable us to track the progress of the programmes,” adds Esther Kivindio, Director of Administration and Partnerships in the Department of Agriculture, Makueni County.
They partners target achieving an insurance penetration rate of 40 to 50 per cent. They want authorities to formulate policies that will spur the uptake of insurance, noting that even at the policy level, insurance is still viewed as a miscellaneous item.
