Impacts of index-based livestock insurance in Ethiopia & Kenya
Development institutions have invested millions in developing and piloting index-based livestock insurance (IBLI) because they see large potential benefits for reducing risk for rural households in developing countries, especially in arid and semiarid areas. An IBLI scheme was launched in Eastern Africa in 2010. The Index Insurance Innovation Initiative (University of California Davis) seeks to test the hypothesis that, by removing correlated risk from the smallholder agricultural and pastoral systems, it will be possible to reduce poverty and deepen financial markets in these areas. The 5-page brief “The favorable impacts of Index-Based Livestock Insurance: evaluation results from Ethiopia and Kenya” draws together findings from several longitudinal evaluations in southern Ethiopia and northern Kenya. It reveals positive impacts on subjective, economic and health-related indicators of wellbeing, especially in the midst of droughts. More than 40% of sampled households had purchased insurance coverage at least once. Although an upward trend in cumulative adoption could be discerned, there was also a substantial rate of disadoption.