From July 10-14, GIIF, in collaboration with Gallagher Re, organized a study tour to Morocco as part of a capacity-building program for public and private sector stakeholders working on agriculture-based index insurance products in West African francophone countries. The overarching goal of this program is to evaluate the primary challenges in developing agricultural insurance in West Africa and identify the most promising solutions to address these issues.

For the study tour, the South-South knowledge-sharing exchange brought together participants from Burkina Faso, DRC, Niger, and Senegal. The objectives were to inform participants about the progress of the analytical work within the program, analyze opportunities to leverage private markets and insurance solutions to strengthen public solidarity funds and learn from Moroccan experiences in solidarity funds, climate risk analysis, insurance, and public-private partnerships. Ultimately, the aim is to establish potential future operations in these countries regarding climate risk solutions.

The South-South exchange was attended by 13 participants. Meetings were held with the Ministry of Finance, FSEC (Solidarity Fund against Catastrophic Events), ACAPS (Supervisory Authority of Insurance and Social Welfare), SCR (Central Reinsurance Company), and the FMSAR (Moroccan Federation of Insurance and Reinsurance Companies). To offer an overall picture of the information exchange among the participants, here is some input received from delegations.

According to Saïdou Sankara, President of the Technical Committee of the National Council for Food Security in Burkina Faso: “Regarding the Food Security Support Fund (FASA), the lessons learned from this study tour can be used to enhance Burkina Faso’s preparedness for a more effective management of actions in response to food and nutritional insecurity in the country.” He added: “For agricultural insurance, the experiences gained during this journey will enable: i) further analysis of agricultural risks, identifying insurable ones, and proposing a mechanism to mitigate those that are uninsurable; ii) strengthening the agricultural risk management framework by considering all stakeholders and collectively developing the best strategy(ies) to address these risks; and  iii) emphasizing the collection of reliable data to increase the chances of being considered in the reinsurance market."
The GIIF team also interviewed the Gallagher Re team[1] to gather their impressions of the study tour and capacity building program overall.

GIIF: How would you summarize the overall program and its potential impact on public and private sector practitioners?

Gallagher Re: Through its various pillars, the program aims at strengthening the capacity and, ultimately, the financial response to disasters in West African Countries. The program emphasizes the importance and role of both public and private actors in the disaster risk financing value chain and ecosystem. The first pillar of the program focuses on micro-level solutions. It identifies critical bottlenecks and sets practical recommendations to scale up agricultural insurance in Niger, Burkina, and Senegal. The second pillar of the program aims at supporting the authorities in one West African country in performing a Disaster Risk Financing Diagnostic and building a Strategic Vision to scale up the existing sovereign financial response to disasters, in complement to the private micro insurance solution. Both pillars will be supported by a series of capacity-building and training events destinated to private and public actors in West African Countries.

GIIF: As part of this capacity-building program, we note that there is a specially designed training component. Could you please provide us with some details about the objective, content, and expected outcomes of this training event?

Gallagher Re: The capacity building and training component aims to provide participants with a comprehensive understanding of the latest technology, data, and analytics that can be leveraged to improve agricultural insurance in West Africa. The training aims to provide insurance regulators and insurance companies with insights into implementing cost-efficient and effective agricultural insurance products in West Africa. The training component will include modules that cover the whole value chain, including fundamentals of disaster risk financing, access to data, designing and pricing of agricultural insurance products, and claims management & payment systems. It will also cover the latest developments in parametric risk transfer and its growth and successful implementation in various country settings and applications, from crop deficit to business interruption and revenue losses.

GIIF: During this study tour and in your interactions with delegations, have you gathered any surprising, interesting, or unexpected insights? How do you envision the outcome of this event shaping the activities under the ongoing program?

Gallagher Re: The countries represented by the various delegations are at different stages of progress in their financial response to climate disasters, including agricultural insurance. The study tour introduced the delegations to the various public and private actors of Morocco's Disaster Risk Financing Ecosystem, including the Ministry of Finance, the Insurance Authority, the Solidarity Fund FSEC, the Moroccan Federation for Insurers, and the National Reinsurer. Building on the synergies created by a public-private partnership, all actors have contributed directly or indirectly to Improving the legal and institutional framework, catastrophic risk analytics and modeling, and ultimately developing the dual mechanism for catastrophe risk insurance targeting vulnerable and insured populations. We believe this study tour has contributed, in a practical way, to raising awareness and highlighting the benefits of improving risk understanding and data availability in West African countries and how they are key to prioritizing, targeting, and optimizing the use of public funds and risk transfer solutions.  It also helped demonstrate the potential synergies between the public and private sectors and benefits with regard to climate and financial resilience at the macro, meso, and micro levels. The key messages and takeaways were illustrated through actual experiences and cases in Morocco, allowing participants to raise questions and learn directly from peers. All of this will develop a very practical sense of the tasks ahead for these countries and facilitate the adoption and implementation by the authorities of the different recommendations to be delivered under this program.

To follow on the above point, regarding the insights gathered from participants, Mr. Abdou Thiam, Director- Cooperation and Partnership, Fonds National de Solidarité, Senegal, added: "The experience of the Moroccan market could help us to do more work on collecting the data needed for modeling, but also to set up a system of taxation on insurance to finance the NSF's activities against disaster risks in Senegal.”

According to Mr. Roland Yahaya, Ministry of Finance, Niger – Insurance Control Division, one of the key highlights of the study tour was “Our countries are prone to cyclical natural phenomena (droughts, floods, etc.), often causing significant damage. Therefore, the lessons learned must be capitalized upon and replicated to effectively carry out the ongoing process of establishing and financing agricultural insurance in Niger, and beyond, to enhance national solidarity for efficient management of catastrophic events. Achieving this requires political will and active involvement of both public and private stakeholders, as exemplified in the case of Morocco.” In terms of the main next steps for the Niger delegation, he added the following: i) the establishment of a committee for the formation of the national company, and the operationalization of agricultural insurance ii) training and raising awareness among all stakeholders iii) the establishment and strengthening of data infrastructure iv) the establishment of a specialized expert committee to design the strategy for financing disaster risks, leading to the establishment of a dedicated Fund similar to FSEC.

This is a potentially transformative time for the agriculture sector in the region to support improved sustainability, resilience, and livelihood protection of farmers and the most vulnerable. We believe that the knowledge and insights gained during this study tour will play a crucial role in shaping the future operations of agricultural insurance. We hope that the lessons learned from Moroccan experiences, along with the analysis of opportunities to leverage private markets and insurance solutions, will contribute to the development of effective strategies to address the identified challenges.

We thank all our participants who joined us during the study tour, the Gallagher Re team who put together a comprehensive agenda and for their valuable input, and the country representatives interviewed above for their contribution to this newsletter.

[1] The capacity building initiative is being run by Gallagher Re’s team in the Public Sector, Climate Resilience, and Parametric Solutions Global Practice

Photo Credit: Global Index Insurance Facility Study in Morocco, July 2023