In Kenya’s drylands, drought has always been the greatest hazard faced by livestock herding families. Modern pressures are making this situation worse. This film tells the story of a research project started in 2007, which in 2010 introduced a new form of insurance to remote herding peoples who had never been provided with insurance before. This new insurance product has potential to protect many other herding communities throughout Africa (image and film by ILRI).

This week, the website of a Livestock-Climate Change project that is part of a US-funded Collaborative Research Support Program (LCC CRSP) reports on the role of John McPeak, of Syracuse University, in helping to launch the first-ever ‘index-based livestock insurance’ (IBLI) scheme in Kenya. This LCC CRSP report refers to news from SciDevNet that, facing extreme drought conditions that are afflicting the Horn of Africa, these insured livestock keepers in Kenya may soon receive their first payments.

‘The ILBI scheme uses freely-available satellite data to assess pasture condition. Pastures with dead forage reflect light differently than pastures with live, healthy vegetation. When livestock keepers file a claim, scientists can show insurance companies that pastures have dried up, eliminating the need for insurers to verify animal deaths in person–a difficult process in the developing world. Payments are triggered when severe drought makes forage scarce over a long period and when it can be predicted from that that more than 15% of livestock in the area will have died of starvation.

‘McPeak is a member of the technical team that helped to develop this program. His focus was on developing a game that was used to teach livestock keepers how the insurance scheme works. “We came up with this game with poker chips and ping pong balls to illustrate how the insurance works. We were also trying to illustrate that it is only some kinds of risk that insurance covers. Animals stolen by raiders and eaten by predators wouldn’t be covered by the insurance.”

‘Other partners include the International Livestock Research Institute (ILRI), Cornell University, and the University of Wisconsin (BASIS Research Program).

‘SciDevNet reports that about 2,500 livestock keepers in Kenya have purchased the insurance since the project’s inception, paying a yearly premium of up to $100 USD for 6-8 animals. Those who [insured their animals] may receive around $180USD per animal. Conditions in Kenya have been particularly harsh this year and the predicted mortality rate is high, according to ILRI’s Brenda Wandera.

‘“We will be monitoring this process to see how it all works out,” explains McPeak. “We’re hoping for wider adoption and are also interested to see if it allows people to diversity incomes or hold more livestock. Eventually, rather than cash-payments, it would be interesting to see if we could have insurance that provides feed during drought, rather than replacing lost animals. It costs much less to provide supplemental feed, compared to replacing animals.”

‘The project is funded by the World Bank and the United States Agency for International Development (USAID). The UK Department for International Development (DFID), and the Rockefeller Foundation. Kenyan insurance companies Equity Insurance Agency and UAP Insurance Limited are helping to implement the project.’

Read this report at LCC CRSP website: Index-based livestock insurance tested by drought in Kenya, 16 Aug 2011.

Visit the IBLI blog.

Watch a 12-minute version or a 3-minute version about the Index-Based Livestock Insurance Project, produced by ILRI in January 2010.

Read a summary of the project.