Genesis and growth of agricultural microinsurance

The document " Genesis and growth of agricultural microinsurance » was co-written by the Grameen Crédit Agricole Foundation and by FARM.

Efforts to improve farmers' access to agricultural insurance products are more important than ever. Concerns about food security, amid rising demand, volatile commodity prices, and climate change, have increased interest in agricultural insurance and spurred the establishment of several pilot projects in recent times. With the majority of the population in developing countries living in rural areas, agriculture can also be a key driver of economic and human development. However, farming is a risky business, especially in developing countries, where smallholder farmers often face a range of risks related to weather, market, production, and the political environment.

Interest in agricultural insurance stems from its potential impact on farm viability, as it can help farmers retain their productive assets and maintain their ability to reinvest in the next crop cycle, despite a poor harvest. Insurance is also expected to provide access to credit and promote agricultural lending, which can lead to new investments in productivity.

New technologies are contributing to progress and creating new opportunities. In emerging markets, agricultural insurance premiums are increasing significantly in a handful of countries—India, China, Mexico, Brazil, etc.—due to significant government support. As a result, the number of premiums written in agriculture is reaching record levels. However, where there is no significant government support, markets are increasingly slow. Furthermore, heavily promoted index-based products have not been successfully marketed to smallholder farmers on a large scale outside India.

THE Microinsurance Network commissioned this report from the Grameen Crédit Agricole Foundation and to the Foundation for Agriculture and Rurality in the World (FARM) as part of the "Network Strengthening" program, financed by BMZ in partnership with GIZ and ADA. The document written by Thérèse Sandmark, Agricultural Microinsurance Business Manager at the Grameen Crédit Agricole Foundation, Jean-Christophe Debar, director of FARM, and Clémence Tatin-Jalera, an independent microinsurance consultant, offers an overview of current debates and developments in the agricultural insurance sector in developing countries, with a particular focus on the unique challenges associated with index insurance products.

The report begins by setting the context, describing how agricultural insurance emerged in Europe and North America and later spread to other continents. It then analyzes the current state of agricultural insurance markets worldwide. Recent developments have seen the development of index insurance programs, which are detailed in the following sections. A discussion of the actors involved in the provision of these insurance contracts, incorporating recent literature on the topic, highlights what can be learned about the value of these products. Four case studies, from Brazil, Morocco, Senegal, and China, present different country examples and compare their approaches to agricultural insurance development, focusing on the value proposition of each scheme. The conclusion highlights the key lessons that can be learned from the implementation of agricultural insurance worldwide, with a view to promoting its expansion in less developed countries.

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• in French, click here
• in English, click here