Microinsurance against climate change

Climate change is destroying development progress in many places. The clever interaction of digitalisation and the insurance industry protects affected small farmers.

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Big challenges, one solution: Microinsurance to protect small farmers in the event of climate-related crop failures. © Christoph Mohr/GIZ

Claudia Voß

Claudia Voß is the spokeswoman for the "Afrika-Verein der deutschen Wirtschaft" (Africa Association for the German Economy).

In Africa, there are countless hectares of unused land and extremely long hours of sunshine. But the World Risk Report presented at the end of last year in Berlin also shows: Many African countries are struggling with weather extremes such as droughts or floods, and these are particularly threatening the livelihood of farmers in Africa and Asia. It is estimated that more than 25 million people worldwide are living in poverty every year because they are the victims of extreme weather events. These are triggered by climate change, which can be traced back to the fact that since the beginnings of the industrialisation, the global average temperature has risen by more than one degree.

Recently, international heads of state negotiated at the 23rd UN-Climate Change Conference in Bonn on measures to limit the increase of global warming.


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Farmers in Nigeria receive a SMS containing the most recent weatherforecast. © Christoph Mohr/GIZ, Montage: Christoph Püschner

One solution: Microinsurance to protect small farmers in the event of climate-related crop failures. Unlike in industrialised countries, farmers, especially small and micro-farmers, cannot afford premiums for traditional insurance. In Kenya, therefore, the microinsurance programme "Kilimo Salama" was launched back in 2009. This allows small farmers to insure themselves against climate-related crop failures.


The special feature: The insurance can be purchased together with the seed for five percent of the purchase price. The farmers do not have to negotiate laboriously with insurance agents first. The processing of the payment is also adapted to the local conditions: Via the M-Pesa payment system, payments can be paid conveniently by mobile phone. If the insurance is in force and the farmer is registered as a customer, solar-powered weather stations will check the climatic conditions in the respective cultivation region. If the rain stops or floods the fields, the farmer receives a refund on his mobile phone.


Weather Trends via SMS

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© Joerg Boethling/GIZ

So Kilimo Salama is using a number of innovations and reducing the administrative burden. Inspection visits, damage assessments and lengthy settlements are eliminated. Hence, the insurance is affordable for small farmers who farm only a few fields. In 2016, the project had more than one million participants in Kenya, Rwanda and Tanzania alone. Meanwhile, farmers in Ethiopia, Nigeria and Zimbabwe are also benefiting from the insurance.


In addition, the project focuses on sustainability: Weather station reports are evaluated to gather insight on regional weather trends. With this information, which is passed on via SMS, farmers can better adapt to climate change and plan their harvest accordingly.



With the support of insurance, small farmers are often prepared to take greater risks. They spend more money on seeds, grow more as such and earn more in the long term.


The microinsurance programme was developed as part of a partnership between the Syngenta Foundation for Sustainable Agriculture, an insurance company, and the mobile operator Safaricom. Since 2014, the programme has been run by the ACRE company established for this purpose.


Many members of the German-African Business Association now also have similar offers in their portfolio. For example, the insurance company Allianz which operates worldwide. It is represented in 16 African countries and provides microinsurance coverage to approximately 500,000 low-income families and individuals. The success is evident on both sides. With the support of insurance, small farmers are often prepared to take greater risks. They spend more money on seeds, grow more as such and earn more in the long term. In Kenya, this revenue growth in maize harvesting is estimated at around ten percent, which translates to an additional yield of $ 92.50 per acre of acreage


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Mobile communication is the key. © Angelika Jakob/GIZ

Increasingly, the economy and non-governmental organisations work together as one: Together with the NGO One Acre Fund, sfr Consulting, a company of the Munich Reinsurance Company, Munich Re, is currently offering a new insurance coverage against weather-related crop failures for small farms.


More than 500,000 small farmers in East Africa are supported with agricultural means of production, financing and training programmes.


The insurance is part of a larger project aimed at sustainably increasing agricultural production on the African continent: More than 500,000 small farmers in East Africa are supported with agricultural means of production, financing and training programmes. According to the NGO which was founded in 2006 in Kenya, the participants were able to, on average, double their entries and increase their income by more than 50 percent after enrolling in the programme. The risk transfer solution of the Munich Re subsidiary protects the participants of the programme.


Security despite Climate risks

In the face of tropical storms, floods and droughts, which in developing countries repeatedly threaten livelihoods and undermine development progress, politics is also responsible. Under German Presidency in 2015, the G7 set themselves the goal of securing an additional 400 million poor and particularly vulnerable people in developing countries against climate risks by 2020. And together with the private sector.

For this reason, the German Federal Ministry for Economic Cooperation and Development and the KfW Banking Group have launched a joint initiative to expand their climate risk insurance policies. The aim of the "InsuResilience Solutions Fund" is to develop marketable insurance products together with the private sector. They are intended to protect people particularly affected by extreme weather events against climate risks. The Federal Government is providing 15 million euros for this purpose. The private sector participates in the implementation of the fund by the same amount as the Federal Government.


In this way, African small farmers can protect themselves from climate disasters and utilise the many unused hectares of land and hours of sunshine.



Über den Autoren

Claudia Voß

Claudia Voß is the spokeswoman for the "Afrika-Verein der deutschen Wirtschaft" (Africa Association for the German Economy).

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