2015年-世界发展银行全球_Kilmo_Salama_-_Index-based_Agriculture_Insurance___A_Product_Design_Case_Study_15页_1mb

KILIMO SALAMA - INDEX-BASED AGRICULTURE INSURANCE Summary

Core Content

Kilimo Salama is an index-based agricultural insurance product designed to protect small-scale farmers in Kenya from weather-related risks such as drought and excessive rainfall. It was developed by the Syngenta Foundation for Sustainable Agriculture (SFSA) in partnership with Safaricom and UAP Insurance. The product is a response to the limitations of traditional indemnity-based insurance, which is costly, time-consuming, and often associated with fraud.

Main Objectives

• Protect farmers against weather-related financial shocks.
• Increase access to finance for underserved populations.
• Bridge the product gap between financial institutions and the needs of small-scale farmers.
• Promote responsible financial inclusion through innovative and scalable products.

Key Innovations

• Index-based payouts: Payouts are determined by comparing actual rainfall data to historical regional averages, using the Water Requirement Satisfaction Index (WRSI).
• Mobile technology integration: Kilimo Salama is the first micro-insurance product distributed via a mobile network, leveraging Safaricom's M-PESA system for payments.
• Simplified insurance model: Farmers can insure small inputs (e.g., one bag of seeds) and gradually increase coverage, making it easier to build trust.
• Use of local stockists: The product is sold through Syngenta's existing agri-dealer network, which is well-established and trusted by farmers.
• Behavioral economics application: The product uses concepts like the "availability heuristic" and "mental accounting" to improve uptake and trust.

Product Design and Implementation

Product Design

• Developed by SFSA in collaboration with Safaricom and UAP.
• Focuses on input insurance, not output, which reduces the need for on-site assessments.
• Utilizes automated weather stations to collect accurate and objective data.
• Premiums are calculated based on historical drought frequency, with an average of 10%.
• Payouts are determined by deviation from the rainfall index and are region-specific.

Distribution Strategy

• Partnered with Safaricom to use mobile phone networks for affordable and convenient access.
• Utilized Syngenta's stockist network to reach remote areas.
• Farmers can purchase insurance at the time of buying seeds or other inputs, bundling the cost with their purchases.
• Mobile banking (M-PESA) is used for premium collection and payout distribution.

Customer Outreach and Trust Building

• Radio advertising and group training sessions are used to inform farmers about the product.
• Local trainers are employed to better communicate with farmers and build trust.
• A phone help line is available for customer support, with agents trained in regional customs and dialects.
• Farmers are encouraged to test the product with small insurance amounts, gradually increasing coverage.

Evolution of the Product

• Initial pilot (2009): Covered 200 farmers in Laikipia with two weather stations.
• Free premium strategy: Initially offered free, but farmers were skeptical. Premium was later set at 10%.
• Expanded coverage: From maize to other crops and later to crop outputs through Kilimo Salama Plus.
• Partnership with MFIs: In some areas, enrollment in Kilimo Salama is mandatory for farmers seeking loans, increasing adoption.

Results and Impact

• Coverage growth: From 200 farmers to over 12,000, with 30 weather stations.
• Payout success: Farmers have received payouts during drought periods, helping them recover from financial shocks.
• Behavioral impact: Farmers who previously had negative perceptions of insurance have shown willingness to adopt the product.
• Scalability and sustainability: The product is scalable and cost-effective due to minimal transaction costs and the use of existing infrastructure.

Partner Benefits and Profitability

• Safaricom has seen profits through M-PESA transaction fees and increased customer engagement.
• UAP Insurance has not yet turned a profit but is optimistic about future viability.
• Syngenta Foundation has contributed to financial inclusion and farmer resilience, despite initial challenges in gaining trust.

Conclusion

Kilimo Salama is a successful example of how index-based insurance can be designed and implemented to address the financial vulnerabilities of small-scale farmers in developing countries. By leveraging mobile technology, behavioral insights, and strategic partnerships, the product has improved access to risk protection, enhanced trust, and demonstrated the potential for scalable, sustainable financial solutions in agriculture.