weather insurance in practice, ethiopia
DESCRIPTION
Presented by Eyob Meherette (NISCO) at the Workshop on Developing Index-Based Livestock Insurance to Reduce Vulnerability due to Drought-related Livestock Deaths, ILRI, Addis Ababa, Ethiopia, 12 July 2010.TRANSCRIPT
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WEATHER INSURANCE IN PRACTICE, ETHIOPIA
Eyob Meherette/NISCO
Workshop on Developing Index-Based Livestock Insurance to Reduce
Vulnerability due to Drought-related Livestock Deaths, ILRI, Addis Ababa,
Ethiopia, 12 July 2010
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We Care We Protect
I. Background
II. Market Based Risk Transfer
III. Boset Weather Index Insurance
IV. Challenge and Scalability
Highlights of the Presentation
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Ethiopia, East Africa
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I. Background
Brief country profile(Ethiopia)Area total 1.14mill. Km2Arable land 45%Population
◦Total 78.2mill◦Density 68.6/sq.km◦Working age 51.9%
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Economy ◦GDP Birr 336.1 bill around 28 bill
USD(2008/09-NBE)◦Growth average 10% last four years◦Agriculture contribution 44%
Agriculture ◦83% of the population ◦87% of export earning◦90% are small holders◦97% of the farms are rain-fed
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Agricultural Risk
The major agricultural risk Deficit rainfall (drought)
Risk management practices Ex-ante
Traditional risk sharing & risk smoothingGov’t introduced
◦Productive safety net program
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Post-ante ◦Traditionally selling of animals & other
productive assets ◦Gov’t used to address such shock via
disaster prevention & preparedness commission
In both cases there was no market based risk transfer mechanism
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Crop Season
Wereda Insured Farmers
Potential Client
Type of Cover
Crop Type Farm size In ha
Sum Insured in Birr
Premium in Birr
Claim in Birr
Loss Ratio in %
2007 Lume“Boset
97158
22,896 DT““
WheatTeffH.Bean
172.9117.555.75
503,513.9242,840.00117,521.00
23,715.512,017.765,535.24
- -
120 246.16 663,874.92 31,2682008 Lume
AdamaBosetAdea
22465146109133103
25,000DT Wheat
H.BeanWheatTeffLentilChickpea
324.5878.65118.2549.007651.25
1,446,003.9304,356.15526,803.75196,490.00224,200.00148,215.00
68,106.7814,335.1824,812.259,254.6810,559.806,980.93
91,465.78- -
827 777.83 3,076,282.50 144,960.32 522009 Lume
AdamaWelenchetiBosetBosetAdea “ “Total
602386613719824261813
DTDT DTDTWIDT““
WheatTeffH.BeanH.BeanH.BeanWheatTeffLentil
95.730.025.027.0159.75141.92184.532.5477.17
619,370.40211,950.0098,150.00106,002.00639,000.00901,064.271,326,573.45109,850.004,011,959.72
32,888.5711,254.555,211.775,628.7173,485.0047,846.5170,441.055,833.04252,589.20
310,000
Kola -Temben
200 10,000 WI Teff 21.0 115,000.00 27,600.00
G.Total 1960 57,896 1522.16 7,867,117.14 456,417.50 401,466 88
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II. Market Based Risk Transfer (NYALA’S Experience)
In the first two years 947 farmers were insured under two unions, four weredas under – DT multiple perils cover.
The cover was for their Teff, Wheat, Lentil and chickpea.
. Last season 200 farmers of Teff growers in Kola Tenben wereda (Adi ha) were insured under weather index (in cooperation with OXFAM /IRI)
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Index was based on NDVI using remote sensing methodology along with WRSI & farmers input
137 small holder farmers of haricot bean growers in Boset Wereda (Boffa) insured under weather index (in cooperation with WFP)
This year we are piloting a weather protection product in cooperation with IFPRI
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III. Boset Weather Index Pilot Insurance
1. Objective This pilot intends to protect the livelihoods of
small scale farmers, who are vulnerable to severe and catastrophic weather risks particularly drought
Enhance Small holder farmers access to agri. Inputs
Enabling the development of Ex-ante market based risk management mechanism which can be scalable in the whole country.
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2. Target Group
• Small holder farmers(0.5ha)
• Members of Lume, Adama farmers cooperative union(LAFCU)
• Haricot bean/Teff/Serial growers
• Have little or no savings to buy agricultural inputs
• Need to buy the inputs on credit from LAFCU
• Vulnerable to weather risk esp. deficit rainfall (drought)
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3. Contract Design
• Pilot area was selected based on:-
• Availability of weather station
• Vulnerability and occurrence of deficit rainfall (drought)
• Willingness of the Union to cooperate
• Existence of demand (need) for weather insurance
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• In designing the contract
• Ten years rainfall data from sodere w.st (15 Km) and two years data from the Boffa w.st were used to perform the historical burn analysis (HBA)
• To fill the statistical gap water requirement satisfaction index (WRSI) and the rainfall deficit computation panel (LEAPMETER) were presented
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Focus group discussion with farmers /NMA person, Agri. extension agents was conducted.
Crop cycle is divided into 3 main phasesInitial phase (Bukaya)Mid phase (Abeba)Final phase (Eshet)
Each phase composed of several 10 days called decade.
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Rainfall Deficit Computation Panel for haricot beans in
Boffa
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DateRainfall
[mm]Expected Rainfall
[mm]Deficit [mm]
Jul 1 - Jul 10 20
Jul 11 - Jul 20 25
Jul 21 - Jul 31 30
Aug 1 - Aug 10 42
Aug 10 - Aug 20 45
Aug 21 - Aug 31 30
Sep 1 - Sep 10 30
Sep 11 - Sep 20 25
Sep 21 - Sep 30 10
Total Phase Deficit [mm]
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How it works International
ReinsurerSwissRe.
NationalInsurance Co.
(NISCO)
Support Providers Policy Holders (Far Coop Union etc)
NMAMinist.
Of Agrict.
Partners
Insured Members
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Boffa H.beans, Mid August/2009
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NISCO’s Agronomist discussing with farmers
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IV. CHALLENGS & SCALABILITY
Major Challenges: Infrastructure esp. weather Sts. Limited Weather Data Basis Risk Reinsurance Technical knowhow/Capacity Farmers upfront paying capacity Affordability
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Scalability: High potential Demand
Well Structured Unions
Diversification/various products
Gov’t support
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