Index-Based Livestock Insurance: A Lifeline for Kenyan Livestock Farmers
Kenya’s livestock farmers, particularly those in arid and semi-arid lands (ASALs), face significant challenges due to recurring droughts, which result in massive livestock losses. Index-Based Livestock Insurance (IBLI) offers a practical solution by providing financial protection against these climate risks. For those considering large-scale livestock farming, understanding and leveraging this insurance is essential for resilience and profitability.
Index-Based Livestock Insurance is an innovative insurance product designed to mitigate the risks associated with livestock farming in drought-prone areas. Unlike traditional insurance, IBLI does not require farmers to report individual losses. Instead, it uses satellite data to monitor vegetation cover, which acts as a proxy for forage availability. If the vegetation index falls below a certain threshold, payouts are triggered automatically. IBLI works by:
- Satellite Monitoring: Tracks forage availability using Normalized Difference Vegetation Index (NDVI) data.
- Index Thresholds: When forage levels drop below predefined levels, indicating drought, insurance payouts are initiated.
- Automatic Payments: Once the threshold is reached, payments are made to all insured farmers without the need for claims processing. This system is efficient, reduces administrative burdens, and ensures that farmers receive timely compensation.
While IBLI has historically targeted small-scale pastoralists, it is also available to large-scale livestock farmers willing to register and meet eligibility criteria. Large-scale farmers, who often have higher-value operations, can use IBLI to secure their investments against climate-induced losses. IBLI services are primarily available in Kenya’s ASAL regions, which include: Marsabit, Isiolo, Wajir, Mandera, Garissa, Turkana, Samburu, Tana River and Kajiado. These counties are characterized by high livestock dependency and significant vulnerability to drought. IBLI is offered by several insurance companies in Kenya with the aim to supporting livestock farmers in building resilience drought-related shocks.
The benefits of IBLI for large-scale farmers include the following:
- Financial security: Protects against losses due to drought.
- Business continuity: Ensures stable operations during the adverse conditions.
- Predictable Costs: premiums are calculated based on the number of livestock and risk levels.
- Customizable coverage: Tailored insurance plans can address specific needs of large-Scale operations.
Steps for large scale farmers to access IBLI:
- Registration: Contact IBLI providers to register your livestock and understand policy terms.
- Premium Payment: Pay premiums based on the agreed coverage plan.
- Monitoring: Participate in data collection and comply with any administrative requirements.
- Receive Payouts: In the event of drought, payouts are automatically triggered.
Index-Based Livestock Insurance is a vital tool for livestock farmers in Kenya, providing financial protection and resilience against drought. For large-scale farmers, it offers an opportunity to safeguard significant investments while ensuring operational stability.
Lesama Limited is well-positioned to support large-scale livestock farmers in acquiring or leasing land for livestock farming in Kenya. Contact us to explore available options.
Lesama Limited
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