Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN) Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN)

FANRPAN conducted Weather-based Index Insurance Workshops in Zambia
24 November 2015 - 28 November 2015

The Food, Agriculture and Natural Resources Policy Analysis Network (FANRPAN) conducted four workshops on promoting weather based insurance schemes for smallholder farmers in Zambia from 27 - 28 November. Risk Shield Consultants facilitated the workshops; Mr. Njongenhle Nyoni represented the FANRPAN Regional Secretariat. Mr. Nyoni outlined the purpose of the workshops and the partnership between FANRPAN and COMESA to support agencies promoting weather based index insurance schemes for smallholder farmers.

The first two workshops were conducted in Monze and Choma targeting NWK agri-services ( regional and shed managers. During the workshops, the facilitators explained the insurance product being offered via the NWK Contract Scheme and the roles of NWK Managers. Participants were informed that the insurance product offers two products (i.e., Weather-based Index and Life Insurance) in one. The claim process was also outlined and queries addressed. Twenty-two participants attended these workshops in Monze and in Choma.

A further two workshops were conducted at Palmwood Lodge, Lusaka. Twenty multi-stakeholders, who included representatives from Farmer Organizations and various insurance/financing companies, attended the first workshop on Friday the 27th of November 2015. The workshop facilitators explained the significance of the Weather Based-Index Insurance products for small-scale farmers and the roles each stakeholder can play in awareness, enrolment and assistance of farmers.

On the 28th of November, 18 participants attended the final workshop targeted exclusively at Mayfair Insurance Company staff. The objective of the workshop was to build capacity within Mayfair in order to encourage increased participation in the agriculture insurance market. This in turn, would lead to more willingness and capacity of underwriting and maintaining agricultural insurance products in Zambia. This workshop covered the following topics: General overview on agriculture insurance; Introduction to weather index and other types of agriculture insurance; Experience of weather index insurance in Zambia; Case study on the product features; Data requirements; Product design and pricing; Claims process; Next steps for implementing weather index insurance in Zambia.

Key Issues Raised

A number of key points were raised in the workshop, which included:

  • The need for sufficient time and resources for client education and awareness to build client demand.
  • The option for weather index insurance products to cover the expected yield and not just inputs so that the insurance is not perceived as only covering the interest of the lender or aggregator.
  • The product should be appropriately priced at a level that farmers are willing to pay.
  • Insurers were concerned of basis risk. Their main concern was that if contracts are mismatched with farmers' experience and /or the agricultural season, and farmers suffer losses but due to basis risk, no pay out is triggered, there is potential for reputational risk.
  • There were discussions about including loss verification in addition to the automatic trigger before making final pay-outs as per the weather index insurance contract.

Feedback obtained from the participants showed that the training was quite relevant to their current and future plans. However most participants indicated that they would prefer future workshops to be conducted over two or more days. More time needs to be spent on the product development training especially pricing.

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