The Potential for Scale and Sustainability in Weather Index Insurance

The Potential for Scale and Sustainability in Weather Index Insurance for Agriculture and Rural Livelihoods Enabling poor rural people to overcome poverty The Potential for Scale and Sustainability in Weather Index Insurance for Agriculture and Rural Livelihoods Enabling poor rural people to overcome poverty © International Fund for Agricultural Development and World Food Programme. 2010. Potential for scale and sustainability in weather index insurance for agriculture and rural livelihoods, by P. Hazell, J. Anderson, N. Balzer, A. Hastrup Clemmensen, U. Hess and F. Rispoli. Rome. The opinions expressed in this publication are those of the authors and do not necessarily represent those of the International Fund for Agricultural Development (IFAD). The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of IFAD concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The designations “developed” and “developing” countries are intended for statistical convenience and do not necessarily express a judgement about the stage reached by a particular country or area in the development process. This publication or any part thereof may be reproduced without prior permission from IFAD, provided that the publication or extract therefrom reproduced is attributed to IFAD and the title of this publication is stated in any publication and that a copy thereof is sent to IFAD. Printed by U. Quintily, Rome March 2010 Table of contents ACKNOWLEDGEMENTS 5 ACRONYMS 6 EXECUTIVE SUMMARY 9 CHAPTER 1. RISK IN AGRICULTURE 13 The problem 13 Types of risk in agriculture 13 How risks are traditionally managed 15 Households and communities 15 Financial service providers and input suppliers 17 Private insurers 17 Governments and relief agencies 18 CHAPTER 2. WEATHER INDEX-BASED INSURANCE 21 Index insurance for disaster relief 23 Index insurance for development 24 Challenges for index insurance 26 Demand 26 Contract design and basis risk 29 Reinsurance 30 CHAPTER 3. KEY DRIVERS OF SUSTAINABILITY AND SCALABILITY OF WEATHER INDEX INSURANCE 33 Create a proposition of real value to the insured, and offer insurance as part of a wider package of services 36 Build the capacity and ownership of implementation stakeholders 39 Increase client awareness of index insurance products 41 Graft onto existing, efficient delivery channels, engaging the private sector from the beginning 43 Access international risk-transfer markets 44 Improve the infrastructure and quality of weather data 45 Promote enabling legal and regulatory frameworks 48 Monitor and evaluate products to promote continuous improvement 49 CHAPTER 4. ROLES FOR GOVERNMENTS AND DONORS IN PROMOTING THE SCALING UP OF INDEX INSURANCE 53 3 CONCLUSION 59 REFERENCES AND RESOURCES 60 GLOSSARY 63 ANNEX. CASE STUDIES 65 1. AGROASEMEX in Mexico 65 2. PepsiCo contract farming in India 75 3. Index insurance in Ethiopia – three pilots 85 4. Index insurance in China 97 5. Private and public index insurance in India 105 6. Forage Rainfall Plan in Ontario, Canada 121 7. Rainfall and vegetation index insurance pilots in the United States 129 8. Index insurance pilot in Ukraine 137 9. Index insurance for farm families in Rio Grande do Sul, Brazil 145 4 ... - tailieumienphi.vn