Bundling Protection: How Feed the Future Partnering for Innovation Helped Kenyan Livestock Farmers Prepare for the Unexpected
The search for pasture and water for livestock has become increasingly challenging for millions of pastoralists in Kenya. Climate change has altered weather patterns, made extended droughts more commonplace, and upended traditional knowledge on where to find viable grazing land and water sources.
These factors coupled with a lack of reliable information have created precarious conditions for Kenyan pastoralists These including overgrazing the same areas year-after-year and moves to farther locations that may heighten conflict and increase vulnerability to predators. According to a study by the International Livestock Research Institute (2011), Kenyan pastoralists lose more than 302,000 KES annually per household in market value ($2,700) due to livestock loss. In periods of severe drought, herd losses can exceed 60 percent.
Over the past two years, Feed the Future Partnering for Innovation collaborated with Takaful Insurance of Africa (Takaful) and its partner Project Concern International (PCI) to provide pastoralists in Kenya with an innovative approach to respond to such scenarios: Index-Based Livestock Takaful (IBLT) insurance policies bundled with Afriscout, a resource-tracking mobile app.
Payouts on the policies are based on an index that uses satellite data (known as Normalized Difference Vegetation Index, or NDVI) to detect drought conditions. The data differentiate between green areas (viable grazing areas) and brown areas (non-viable grazing areas) and then compare this information to historical levels. If conditions are met, automatic payments are made to the policyholders to help them maintain the health of their herds.
Combining the policies with Afriscout enabled pastoralists to identify the nearest water and forage sources using satellite imagery and community input, eliminating the need for costly scouting trips. As a result, herds emerged better able to withstand the harsh conditions of a drought, and pastoralists avoided overgrazing or selling their livestock at unfavorably low prices. Takaful is also able to use the captured data to closely monitor evolving conditions and analyze the potential impact on IBLT policy activity and sales.
Despite recent COVID-19-related challenges, the partnership goals were exceeded, with Takaful selling more than 9,600 IBLT policies - 6,700 of them bundled with the AfriScout application – to Kenyan pastoralists. Getting the price right was a key factor: the partnership initially offered a three-month free trial of Afriscout with the purchase of an IBLT policy, but based on customer and sales agent feedback, shifted to a progressive discount on a year-long subscription to AfriScout with the purchase of greater levels of IBLT policy coverage.
During the partnership, the rollout of a pastoralist survey revealed important insights about customers’ knowledge of bundled insurance policies, their willingness to pay for them, and factors —real or perceived —that disincentivized them from purchasing one. For instance, the use of an online mobile application meant that a sales agent could only register a client if a functioning network was available. Without it, the agent must collect information manually and complete the online registration process at a later time, which led to delays and ultimately lost sales.
Another factor underscored a general reluctance among pastoralists to purchase the bundled policy when the need does not appear urgent. The lack of severe drought in some areas, for example, made some pastoralists reluctant to complete the purchase — even if they understood the rationale for it. Building understanding about drought and climate change among pastoralist communities in these areas is critical, including the importance of ensuring livestock even when conditions appear normal.
With pandemic restrictions easing in the country, Takaful plans to apply the lessons learned during its collaboration with Partnering for Innovation to improve its business model and to refine and scale its policy bundle to reach 10,000 new customers by 2026. Through these efforts, Kenyan pastoralists will gain a vital tool as they sustainably manage grazing lands, preserve their way of life and make more informed decisions.