Index insurance design and satellites

“Geospatial Data in Agriculture Risk Management | The IRI Index Insurance Experience”

Dr. Daniel Osgood, Lead Scientist, Financial Instruments Sector Team

FARMD (March 2012) | Until recently, many have doubted that index insurance could scale to the large numbers of farmers needed to meaningfully address poverty.  There has been worry about low demand as well as concern that supply is blocked by technology, data, and infrastructure limitations.

New projects have been overcoming many of these problems. To make it worthwhile for farmers to pay premiums, they are engineering insurance so that it leads to increased profit by making it safe for a farmer to invest in more productive farming methods.  These projects address liquidity constraints, use farmer driven design, and carefully craft insurance to compliment other risk management options.  Logistical delivery challenges are being addressed by leveraging existing distribution systems, such as microfinance networks, seed distributers, work for food safety net programs, and farmer cooperatives that are already delivering related products to large numbers of farmers.

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