ENACTS Transforms Insurance Projects in Africa

By Dan Osgood, Lead Scientist, IRI Financial Instruments Sector Team

Small farms are vulnerable to climate risk, but most smallholder farmers around the world don’t have access to insurance and other financial tools to manage fluctuations in climate. Over the past decade we’ve put a great deal of effort into a new kind of insurance–index insurance–that may have the potential to reach these farmers. Unlike more traditional forms of insurance, which require individual verification of losses, index insurance works by providing payouts when a measurable index flags a major problem that the farmers face, such as a widespread drought or flood. In theory, this should allow insurance coverage to reach many more farmers.