A women receives her insurance payout (photo credit: Jeff Haskins).

‘The index-based insurance program is run by the Kenya-based International Livestock Research Institute (ILRI), and funded by the British, U.S. and Australian governments and the European Union. The donors subsidize the cover to make it affordable for pastoralists.

‘A range of insurance companies sell policies to herders across northern Kenya and southern Ethiopia.

‘ILRI first piloted index-based insurance in Marsabit in 2010. Then, clients received payouts after a drought, at the end of a failed rainy season, to help them replace their assets.

‘By the time payouts were made, some or all of the clients’ cattle, sheep, goats and camels had died, causing households like Kula’s to lose their entire source of income.

‘According to the Kenya Post-Disaster Needs Assessment for the 2008–2011 drought, there were substantial livestock deaths in that period, mostly in the north, worth an estimated KSH 56.1 billion ($561 million).

‘That situation pushed ILRI to adjust the insurance product to pay out faster. “We are now providing asset protection,” said Andrew Mude, the principal economist in charge of the ILRI project. “The idea is to intervene before loss.”

‘With the new product, livestock owners are compensated when satellite imagery reveals poor rains have caused forage to become scarce, meaning they receive the money before their animals starve to death.

‘That has persuaded more herders to purchase the insurance, Mude said. . . .

‘. . . Kenya’s Ministry of Agriculture has enlisted financial support from donors to assist poor households in insuring at least five tropical livestock units (TLUs) for free.

‘One unit represents either one cow, 10 goats, 10 sheep or 0.7 camels, with the payout per unit set at KSH 14,000 ($140). The amount is based on how much it would cost to keep animals alive rather than replace them.

‘So far, the government has launched this assistance in Turkana and Wajir counties, where around 5,000 households have benefited from free insurance.

‘“These households represent 420,000 people whose livelihoods have been safeguarded,” said Julius Kiptarus, Kenya’s director of livestock.

‘He expects that by March 2017, poor households will have access to free coverage in northern Kenya’s other counties, including Marsabit. . . .’

Read the whole article by Anthony Langat at Thompson Reuters Foundation (news.trust.org): Subsidized insurance bolsters Kenyan herders against drought, 13 Apr 2016.

The same news was reported in the Daily Mail and Jakarta Post.

Read more about ILRI’s Index-based Livestock Insurance project.