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Wednesday, 10 August 2011

EU-funded weather index project takes off in Africa

This week, the Kenya College of Insurance in collaboration with the World Bank and the European Union’s All ACP Agricultural Commodities Programme (AAACP) started the Weather Index Capacity Building Programme. The aim is to equip insurers with knowledge and skills on how to develop weather indexed crop insurance products. The trainings will be conducted in Burundi, Malawi, Uganda, Rwanda, Zambia, Ethiopia, Tanzania, Zimbabwe and Mozambique.

Weather Index insurance is insurance that is linked to an index, such as rainfall, temperature, humidity or crop yields, rather than actual loss. This approach solves some of the problems that limit the application of traditional crop insurance in rural parts of developing countries. An example of index insurance and the most common application in developing countries so far, is the use of an index of rainfall totals to insure against drought related crop loss. Payouts occur when rainfall totals over an agreed period are below an agreed threshold that can be expected to result in crop loss. […]

As shortage of rainfall ravages the Horn of Africa region with devastating effect on the food security situation, the insurance industry is digging in to offer a long term solution that could see the region remain food sufficient even when rainfall fails. The solution is in the form of agriculture insurance. The aim is to encourage innovation around weather related agriculture insurance to help farmers face the risk of rainfall shortage that affects yields and lead to loss of income and food shortage.

Source: Coastweek