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Livestock cover for over 2,500 pastoralists in Marsabit

APA Insurance has announced a significant move towards mitigating the effects of drought experienced by pastoralist communities in Marsabit through an Index Based Livestock Insurance cover specific for the region.

This development from APA Insurance, a member of The Apollo Group is a build up to a Kshs 1.15B strategic partnership with Leapfrog Investments – a leading investment fund.

LeapFrog invests in financial services businesses, mostly companies that provide insurance, in Africa and Asia. The partnership focuses on insurance for the under-served people and markets in the region.

APA Insurance in partnership with the International Livestock Research Institute (ILRI) will utilize both satellite and mobile phone technology for product development and monitoring, sales, customer data maintenance; determining potential loss and subsequent compensation of the insured pastoralist should a loss occur.

“We at APA Insurance are committed to change the lives of Kenyans across the country by providing quality, affordable and relevant solutions that give a lifeline in the event of a loss” said APA Insurance CEO, Simon Clayton.

Pastoralists in the Marsabit region can insure their cattle, sheep, goats and camels against drought. Should the satellite readings indicate inadequate rain or forage below the required level that will prompt a pay-out.

Unlike other insurance products that assess loss on a case by case basis and later making payouts based on individual client loss, the index based insurance will protect against shared risk where customers within upper and lower Marsabit areas will receive pay-outs which will be calculated automatically. As the process and details are known in advance this   eliminates the need to file a claim.

The availability of this insurance cover will translate to advantages such as financial institutions recognizing livestock as collateral thereby enabling the insured access credit and engage in preferred economic activities. Livestock loss will now be catered for by insurance, which will provide yearly cover.

The policy is based on geographical clustering covering upper and lower Marsabit based on two separate contracts due to the clear agro-ecological and pastoral production system differences as well as differences in risk.

Upper Marsabit experiences higher herd mortality rates as compared to lower Marsabit. Every insurance policy holder within the same division however, will receive the same rate of insurance payments.

The average price for livestock across Marsabit has been arrived at Kshs.15, 000 for a cow and camel and an equivalent for 10 goats and sheep, upper Marsabit having a higher risk will get a consumer price of 5.5% while lower Marsabit got a consumer price of 3.25%.

Pastoralists will therefore insure each cow and camel at Ksh 825 and Ksh 487.5 for 10 goats and sheep per year. The Index based livestock cover will be based on the weather department’s satellite readings to capture actual satellite measure called Normalized Differenced Vegetation Index (NDVI) that clearly measures forage availability and cannot be manipulated either by the insurer or the insured.

The index Based Livestock Insurance makes a pay-out which is initiated on attainment of an index level which predicts mortality above 15%. This approach is based on the established statistical relationship between area-average livestock mortality and forage availability within a geographically defined space.

The statistical relationship between Normalized Differenced Vegetation Index (NDVI) and livestock mortality is derived from household level livestock mortality data collected monthly since 2000 in various communities by Government of Kenya’s Arid Lands Resource Management Project (ALRMP).

Simon Clayton, CEO APA Insurance further adds, “Marsabit being one of the regions at the heart of changing climatic conditions, made it the perfect region for this initiative. We are reaching out to provide a product that will go a long way in ensuring that pastoralists’ economic capacities and lifestyles remain unchanged. We are asking the pastoralists’ to view livestock the same as a mainline

business person views risks that would affect their stock or building and take due protection”.


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