PlaNet Guarantee - Mali
Clients:
30,218
Partners:
Insurers: Allianz
Reinsurers: Allianz Re, Africa Re, CICA Re
Product design: PG & EARS
Products:
Satellite-based weather index insurance
Insured Crops/Livestock:
Maize, millet, groundnut, rain-fed rice and multi cereal
Insured Perils:
Drought
Total Insurance Portfolio:
78,856 insured farmers and $1,058,810 collected premiums in Senegal, Mali, Burkina Faso, Benin and Ivory Coast
Project Description:
PlaNet Guarantee first sold products in Mali in 2011. The project provided satellite based weather index insurance for cotton/maize farmers in the country, while farmer cooperatives were the main distribution partners.
Insurance Payouts:
$412,656 in Senegal, Mali, Burkina Faso and Benin (2015) with 69 % claims ratio (2015)
Average Cost of Insurance:
11%; $13 per farmer
Development Impact:
Confronted with a difficult local context (high level of taxes, lack of agricultural financing mechanisms, week development of main agricultural value chains), the
index-based insurance program met with difficulties in the beginning. However, innovative use of technology i.e. satellite information to design products in absence of yield and weather station data helped create the market. PlaNet Guarantee also made use of the participatory approach to product development – conducting focus groups and working with farmers to design products that are requested.
Challenges:
Mali has experienced signficant political unrest, which has disrupted operations by financial institutions that lend to farmers and associated insurance sales.
Opportunities:
The scaling up strategy is based on two components:
- Bundling index-based insurance products with inputs financing provided by commercial banks, Microfinance Institutions and input dealers
- Mobile distribution
Moreover, it is important to implement the following:
- Design long term reinsurance contracts in order to align the cost of contracts with farmer’s capacity to pay
- Address structural financial illiquidity in agricultural sector – the products are often sold in conjunction with credit but farmers and cooperatives have difficulty in accessing credit because lending institutions estimate the risks of the farming activity along the entire agricultural value to be too high. The insurance product helps secure the investment and adding additional products and services (such as risk mitigation practices) will help increase the access to credit
- Continue marketing, training and capacity building to raise awareness to the sector
- Evolve regulatory framework to allow for dematerialization of insurance contracts, premium subsidies, etc.
Contacts:
Diakaridia Soumahoro | dsoumahoro@planetguarantee.org