Mircro Insurance: Crop Insurance  Product & Payout

About MI : Microinsurance is the protection of low-income people against specific perils in exchange for regular premium payment proportionate to the likelihood and cost of the risks involved.   Our microinsurance cloud platform enables multiple insurance companies’ access our products, underwrite, sell and manage policy, and payout claims digitally. Our digital payment platform through our agent network enables enrollment and premium collection. There are 4 policy products available under Micro Insurance: NDVI Crop, Index based Livestock, Hospital Cash, Funeral (Edir).

Frame the challenge/ obstacle to the farmer Smallholder farmers in Ethiopia overwhelmingly rely on rain fed agriculture & changing weather conditions result in fluctuations in weather patterns. The unpredictability of weather expose smallholder farmers to production uncertainty and income shocks.

Introduce the propduct : NDVI Crop Insurance

Normalized Difference Vegetation Index (NDVI) is a long standing index used by national and international agencies to monitor the occurrence of drought. The index reflects the amount of active chlorophyll in the vegetation present in the geographical area observed. It is a simple graphical indicator that can be used to analyze remote sensing measurements, typically but not necessarily from a space platform, and assess whether the target being observed contains live green vegetation or not. NDVI is an output based index and measures the current state of green vegetation i.e. it is a measure of the impact on vegetation of weather inputs like rainfall, wind, heat etc.

An affordable crop micro insurance product delivered digitally and covering weather related risk for small holder farmers where the risk premium is derived from index developed from satellite data that looks at the change in greenness of vegetation.

  • An affordable and scalable Vegetation Index Crop micro insurance product that covers weather related risks. The product design is based on an NDVI (Normalized Difference Vegetation Index) data captured by Geo stationary satellites. This NDVI data captured through satellite imagery are then converted into a digital form. It measures the impact on vegetation of weather changes due to rainfall, temperature, wind and precipitation. The index is one data set used to determine the basic pure premium rate of the product.
  • A cloud based micro insurance platform that enables multiple insurance companies to access our product & configure it, issue policy and manage claim payout digitally. It serves as a market place where insurance companies can choose products to underwrite.
  • The cloud platform is linked to our digital financial services platform that allows insurers sell policies through agent and collect premiums within the reach of the small holder farmers. The agent uses digital toolkit to create awareness. 

The Pilot:

Background on the pilot

The pilot was undertaken in the Oromia region particularly with Oromia insurance company and Ethiopian Insurance Corporation.

  • Oromia insurance company (OIC) was able to sell the product to close to 4,079 small holder farmers.
  • Ethiopian insurance cooperation (EIC) sold the police for close to 407 small holder farmers.
  • The digital payment service was used to enroll customers and collect premiums.
  • Satellite data for every decade (ten days) of the growing season has been received and calculated to determine the appropriate claims amount using the Microinsurance platform.
  • Oromia insurance company claim payment has been triggered for 3,821 policy holders for payment of birr 560,000.00.
  • For EIC birr 357,665 has been calculated as a claims payout for 189 policy holders.
  • The product showed high level of accuracy in determining what is actually happening in the ground. This is apparent in the 98% correlation between the field assessment work that was undertaken by the working group and what has been triggered as claims payment in the index reading.

The Impact:

To Small Holder Farmers:

To Insurance companies:

This following two breakthroughs substantially decrease the cost associated with serving this market the traditional way.

  • Insurance Companies are able to access a new product from a cloud platform which allows them to configure and manage their policies and claims digitally.

They are also enabled to reach the market that was unreachable before through our digital finance payment platform

To Partners/ ATA:  A risk management product such as this allows the ATA to transform the agricultural sector and increase the productivity of the farmer. It also encourages farmers to use their entire inputs and the recommended amount of seeds and fertilizer.


Public Financial Enterprise Agency (PFEA):

  • Strategic lead on the rural Microinsurance project and Support the works of EIC

Agricultural Transformation Agency (ATA):

  • Strategic Lead and provide programmatic support to the Microinsurance initiative
  • Developing rural insurance strategies to promote rural development;
  • Establishing systematic risk management program addressing rural community to transform agriculture
  • Leads the Strategic alignment of the MI with Regional Governments

Ethiopian Insurance Corporation (EIC)

  • Commercial owner and Underwriter of the product

Kifiya Financial Technology

  • Develop the product (VICI) and manage the online Microinsurance technology platform and DFS platform for delivery
  • Building capacity of stakeholders involved

National Meteorology Agency (NMA)

  • GeoNetCast system and toolbox management
  • NDVI data maintenance and map production (10-day interval)
  • Weather forecast models data dissemination
  • Provision of Location specific weather alerts
  • Index Announcement

University of Tweent

  • Crop Production system Zone Preparation
  • Support to NMA to set up the “back-bone”
  • Remote sensed data interpretation based on grass-root facts
  • De-aggregation of agricultural area statstic
  • Index model generation
  • Setting pay-out triggers

Oromya Insurance Company

  • Insurance underwriter and implementer

The Future:

  • Kifiya no plans to expand the pilot through the consortium 200,000 small holder farmers are being targeted to in the 40 weredas of the four major regions (Tigray, Amhara, Oromia, SNNPR) for the next planting season.