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Lessons from Implementing Index-Based Livestock Insurance in Kenya: Insights from IGAD Region Conference

Discover key insights and lessons learned from implementing the Kenya Livestock Insurance Program (KLIP) and index-based livestock insurance in Kenya. Gain valuable knowledge on the program design, progress, challenges faced, outcomes, and future plans. Explore the roles of national and county governments, private sector, and technical support providers in executing successful livestock insurance schemes.

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Lessons from Implementing Index-Based Livestock Insurance in Kenya: Insights from IGAD Region Conference

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  1. KENYA LIVESTOCK INSURANCE PROGRAM (KLIP)Lessons learnt from implementing index based livestock insurance – Implementers views INDEX INSURANCE FOR LIVESTOCK IN THE IGAD REGION – ADDIS, ETHIOPIA 24th to 26th JUNE 2019 Richard Kyuma, PhD., OGW KLIP Program Coordinator State Department of Livestock

  2. Justification for Livestock Insurance • Kenya is vulnerable to frequent and extremely expensive natural disasters; • High frequency of drought (every 2-4 years); • 2008 - 2011 PDNA: Total drought losses to Kenyan economy: KShs 968.6 billion and reduction of GDP by 2.8% each year. 72% of this loss is related to livestock; • Severe droughtscausesmorethan 15% mortality of livestock;

  3. KLIP Design • Designed to use forage availability as determined by satellite data - Normalized Difference Vegetation Index (NDVI) to derive an insurance product; • Following the successful piloting of ILRI designed IBLI • Currently the National government provides 100% premium support for 5 tropical livestock units (TLU) for each vulnerable pastoralist; • The insuring company makes payouts directly to the accounts of the beneficiaries when there is a trigger. • World Bank and ILRI provide technical support

  4. Use of Satellite Data (NDVI) INDEX COMPUTATION Temporal aggregation Spatial aggregation MODIS NDVI image (10 day) March-September Temporal aggregation 1-10 May 2011 Normalization Cumulative Seasonal NDVI Seasonal forage scarcity Source: ILRI IBLI team

  5. KLIP Coverage • 8 ASAL Counties under KLIP • Turkana, Wajir , Marsabit, Isiolo, Tana River, Mandera , • Garissaand Samburu

  6. KLIP Progress and Achievements • Period of insurance cover 2015 to 2019 (4 years) • Currently implementing a fully subsidised KLIP product. • 5 TLUs insured for every beneficiary. • 18,000 households covered and 120,000 people benefit annually • Kshs. 706 Millions - Premiums paid by GoK to date • Kshs. 790 Million - Insurance payouts by insurance companies • 90,000 TLUs protected annually valued at Kshs. 4.5Billion

  7. A Public private partnership Roles of National and County Governments • Creation of conducive policy and business environment; • Coordination • Resource mobilization; • Capacity building of stakeholders; • Private sector mobilization; Technical support provided by World Bank and ILRI

  8. County Governments • Extension/outreach services; • Data collection and management; • Selection of insurance beneficiaries; • Aligning programs to complement livestock insurance. • Role of Private Sector/Insurers/Reinsurers • Provision of Insurance cover • Awareness creation, Marketing, Recruitment of voluntary cover • Disbursement of payouts.

  9. GoK KLIP Investment plan upto 2022– under Big Four Agenda

  10. KLIP Outcomes/Impacts • Beneficiaries Empowered to access to animal feed/fodder during droughts • Enhanced access to water for animals during drought periods • Improved access to vet services after payouts • Pastoralists saved from loss of animals • Overall improvement in pastoral drought disaster mitigation and stabilization of production systems.

  11. Challenges • Low funding levels • Low awareness creationand capacity building levels • Beneficiary data management – (manual registers) • High premiums • Slow payout pathways

  12. Lessons learnt • Need to grow insured numbers for commercial case and sustainability • Smart Subsidies • Efficiency in pay-out transfers • Graduation of beneficiaries (full subsidy-partial subsidy-commercial products) • Development of complimentary programs – fodders banks, water tracking, vet services. • Encourage Counties to invest in KLIP

  13. Way forward • Going forward: Voluntary insurance services • Partial subsidies to Fully Voluntary/commercial products • Public education, awareness creation and capacity building – public good • Establish a livestock insurance electronic system for data management; • Development of Livestock insurance Policy andimplementation strategy • Develop local capacities in calculating agent services • Continuous research for product fitnes

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