Effectiveness of livestock insurance in managing climate risk in Ethiopia

Over the past four years, the Catholic Agency for Overseas Development (CAFOD) collaborated with CIFA (Community Initiative Facilitation and Assistance), Oromia Insurance Company and ILRI (International Livestock Research Institute) in piloting index-based livestock insurance (IBLI) to protect Ethiopian livestock-keepers from drought‐related asset losses. The report “Participatory research on the effectiveness of index-based livestock insurance as a pro-poor climate risk management strategy in Borena Zone: the case of Moyale and Miyo Districts” (2018, 46pp) describes the methods and results of a study into determinants of IBLI uptake, impact of IBLI on policyholders, pastoralists’ perceptions of climate-change impacts and IBLI’s contribution to mitigating them. The study also examined government policy related to IBLI.

The study revealed a significant increase in uptake of IBLI over time in terms of number of households and livestock insured. The main driving factors for this increase were a 35% price subsidy offered by CIFA and peer influence among pastoralists to adopt IBLI, which may have resulted from awareness creation or training programmes arranged by CIFA. The pastoralists underlined the contribution of IBLI in protecting their livelihoods against climate risks. As benefits, they identified that they received payouts as indemnification for livestock losses and could replace their lost livestock and could buy fodder in anticipation of drought. They also identified some limitations of IBLI: i) lack of awareness about the IBLI concept; ii) premium too high for poorer groups; iii) pastoralists were discouraged when CIFA stopped providing a subsidy; and iv) many pastoralists do not buy insurance because they do not receive payouts if there is a good rain.

Posted on 29 April 2018 in Pastoralism & Climate Change, Pastoralism & Services, Pastoralist Livelihoods & Nutrition