The objective of the project is to provide the agriculture market in Ghana with more options to hedge against weather risks resulting from droughts and floods. This includes insurance solutions, sovereign risk transfer solutions (through ARC) as well as agricultural risk prevention and/or reduction measures. Additionally, a roadmap was developed to outline recommended next steps to up-scale and intensify the efforts toward an integrated climate risk management in the agricultural sector.

The success factors represent a synthesis of a series of knowledge management products in the context of the project and are aimed at a wider audience of stakeholders that wish to apply commercial agricultural insurance concepts in developing country contexts. The success factors are primarily relevant for micro-level insurance, but some aspects are also applicable to meso-level (portfolio) insurance and macro-level insurance.

This publication has been developed within Advancing Climate Risk Insurance Plus (ACRI+), a project implemented by Munich Climate Insurance Initiative and Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH. ACRI+ is part of the project Promoting Integrated Mechanisms for Climate Risk Management and Transfer, implemented by GIZ on behalf of the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU), funded under BMU’s International Climate Initiative (IKI). The aim of the project is to collaborate with the public authorities in Ghana, Morocco, China

Sustainable insurance solutions for agricultural and climate risk requires a joint effort of both the public and the private sector: the partners need to cooperate and commit to facilitating a market development process. Private insurance companies design appropriate insurance products, establish administrative processes and carry the risk. They invest financial and human resources and commit themselves to the agricultural and climate risk insurance markets. Government support that goes beyond creating an enabling regulatory environment can be critical to the sustainability of such systems

The Peruvian agricultural sector, which is fundamentally important to the national economy, is particularly affected by natural hazards caused by climate change. Insurance as a possible risk management strategy has received only little attention so far (both by clients and by the industry) due to the following reasons. Limited experience with financial products including insurance. Overall lack of understanding of and interest in (climate) insurance among most stakeholders. Widespread lack of trust in insurance companies amongst the population. Lack of investigation and research with respect

Insurance literacy and general awareness on insurance is very low amongst the majority of small scale farmers as well as potential intermediaries in Kenya. This hampers the development of a private-sector driven insurance market. Spreading awareness of insurance and interventions in order to improve insurance literacy among clients have been left so far to the insurance companies and their sales structures. The Insurance Regulatory Authority (IRA) is only sporadically involved. This has obvious cost implications for the private sector. As a consequence, information has mainly been provided to

The high transaction costs of serving low-income clients in developing and emerging market economies demand innovative approaches and technological advancements. Challenges that inflate operational costs include data collection, processing and management, premium payment mechanisms as well as claims verification and settlement. Index insurance products, mobile payment devices or more accurate weather and agricultural-yield information based on satellite data are examples of innovative approaches that can help to overcome these challenges.

Competitive markets are best geared to respond to farmers’ need and offer tailor-made insurance products. It is the government’s responsibility to ensure a level playing field. This is particularly important in countries where state-owned insurers compete with the private sector. Policymakers and the regulator have to create a framework that provides all market players, public and private, the same access to infrastructure and services, such as access to data on weather or agricultural production. In countries where premiums are subsidized, all insurance companies have to be eligible to

The high transaction costs of serving low-income clients in developing and emerging market economies demand innovative approaches and technological advancements. Challenges that inflate operational costs include data collection, processing and management, premium payment mechanisms as well as claims verification and settlement. Index insurance products, mobile payment devices or more accurate weather and agricultural-yield information based on satellite data are examples of innovative approaches that can help to overcome these challenges

Agricultural insurance is a business transaction based on the quantification of risk. The basis for all calculations of risk exposure in agriculture is sound data. Lack of data makes insurance companies shy away from agricultural insurance, either because the uncertainty makes it impossible to calculate risk or because the cost required to generate data makes the business model unviable. Generating data and making that data available to insurance companies is a key contribution from the public sector to the development of agricultural insurance. Insurers should have a right to access data that