InsuResilience in conversation: Interview with Fatou Assah, Global Index Insurance Facility (GIIF)
What are the desired impacts/outcomes that the GIIF/WBG projects are working towards, and how are these being monitored/measured?
Since 2009, the Global Index Insurance Facility (GIIF) has worked to provide catastrophic risk transfer solutions and stimulate all aspects of agricultural insurance – from product innovation to implementation – in more than 30 developing countries and emerging markets in Africa, Asia Pacific, and Latin America. Being part of the World Bank Group’s Climate and Risk Management unit, in the Finance, Competitiveness & Innovation (FCI) Global Practice, we approach insurance solutions by focusing on the increasingly detrimental effects of climate and disaster risks that put millions on the brink of destitution. We strive to build resilience and reduce the vulnerability of households, farmers, financial institutions (MFIs), and small businesses, by ensuring and expanding access to finance. It is for the generous support and funding from the European Union-ACP Secretariat, the governments of Germany, Japan, and the Netherlands that we can do this critical work.
We collaborate with project partners, authorities, and stakeholders in the value chain while adhering to our four-pronged strategy: i) providing technical advice on products and pricing; ii) initiating public policy dialogue and regulatory environment facilitation; iii) conducting capacity building; and iv) promoting financial education. Being part of “FCI” gives us a unique competitive advantage to execute our first two core components of our strategy; because we are among few units in the WBG that are a combination of IBRD and IFC, GIIF has robust expertise in working with the public and the private sectors. For instance, on the private sector side, we work directly with insurance or reinsurance companies to build their capacity in product design and distribution. On the public-sector side, we support an enabling environment to stimulate insurance.
Throughout the years, GIIF has built an extensive network of local partners and international expertise as well as practical know-how from various markets and a vast repository of customized knowledge on this subject. GIIF’s implementation partners have facilitated more than 3.1m contracts, covering approximately 15m individuals, with $392m in sums insured. Recognizing insufficient knowledge and technical capacity to develop suitable products, we have a role in closing the knowledge gap. We help our partners understand and adhere to the best practices that support the healthy, responsible development of insurance markets. Last year, we held our flagship Global Index Insurance Conference in Dakar that convened international practitioners and provided a platform for stakeholders to share the experience. Later this year, we are planning to leverage our convening power by organizing an innovation marketplace, bringing innovators in the various industries – from FinTech, to claim process innovation, to data and modeling – to brainstorm what could contribute to agricultural insurance. In addition, we also have organized a series of technical training seminars for insurance professionals – from the decision-making managers to the actuarial analysts – in South Africa, Kenya, Indonesia, and Ukraine, to name a few. We understand that players in this field look to us; they look for best practices.
We also provide information on index insurance to the public. With our learning programs and online knowledge platform and repository, we hope the public at large will become more accustomed to the product and understand how insurance, as an access to finance, can provide means to sustain food security and food production for communities and larger markets. It is a risk mitigation tool that can positively affect daily life and not just a financial concept.
Achievement towards these objectives is measured by several standard indicators across projects. For examples, key indicators that we track include numbers of new products (designed and approved by the regulator), outreach (numbers insured), claims ratios, and renewal rates as a gauge of sustainability. On the capacity building and awareness front, we track how many insurers and market players have been trained and advised; how many of which have implemented recommended changes. We monitor the number of workshops conducted and the number of attendees.
From a practitioner’s view point, what challenges the projects are facing in achieving those impacts/outcomes? What are some of the limitations of M&E to capturing such impacts?
Like with many innovations, we and our partners face difficulties in creating new markets and scaling up products. To overcome such challenges, we spend a lot of time fostering and maintaining relationships with local stakeholders who understand unique, complex conditions. We would like to give you a summary that includes key input from our colleagues working on projects in Senegal, Zambia, Indonesia, Pakistan, and the Philippines. From a product design viewpoint, getting sufficient, quality historical loss data from target insureds is never a straight-forward process. It requires a lot of research, creativity, and interaction with multiple stakeholders. Therefore, we visit the ministries multiple times with data requests and conduct focus group discussions with farmers to fully understand product demand. Pricing is also a challenging issue as it must strike the right balance between a relevant cover and affordable premiums. When subsidies are available, they must ensure that those subsidies do not distort the market or take away from sustainability. Nevertheless, these challenges have taught us that there is “no one-size-fits-all” solution, especially when we operate globally across different markets.
As we all know, traditionally, it is not easy to raise awareness and trust in conventional insurance products or market. This is more challenging when we add the weather/disaster risk dimension. We see from experience that it takes several years to reach the sufficient levels of awareness and understanding before concrete results show. Even with an ideal product, it does take some time to get a conducive regulatory framework, for instance. This has taught us to patiently stimulate awareness and product appetite at all levels through our communication. It is a dilemma that everyone in this arena faces. It doesn’t stop us from reaching the goal of providing the vulnerable with opportunities to protect, build, and rebuild their lives.
How can gender and vulnerability considerations be more integrated into project design and strategy, and how can they be measured and monitored in a practical way?
We take the gender agenda very seriously. When we were producing a Result Story about a project in Mali, we discovered that not only did index insurance covering sesame help women in a cooperative society stabilize their income when they experienced unseasonal rain, it also enabled the cooperative to further aid the social safety net and economic development of Malian women and children. This impact pushed us to more fully analyze and more diligently implement gender integration into project design. Within the WBG, GIIF has the privilege of learning from other outstanding projects that have successfully applied the gender lens. We also looked at IFC’s SheforShield project that concludes that “when women are insured, everyone in her family is protected.”
Here are three more concrete examples that demonstrate how we approach gender. First, GIIF and our partner in Sri Lanka conducted awareness-raising activities for more than 50,000 farmers on the benefits of the index-based and agricultural insurance products. Thousands of tea and paddy women farmers now understand how insurance allows them to replace inventory and reopen businesses in the face of weather irregularities.
GIIF’s partner in Kenya, ACRE Africa, has developed a mobile platform, with women-focused marketing and product distribution model, that allows farmers to register insurance and receive payouts via mobile phones. With the M-Pesa/mobile transaction component, women can register for an insurance on the go, bypassing other costs e.g. transportation fees, and receive automatic payouts after planting bags of seeds with a replanting guarantee.
In Senegal, GIIF has worked with an international broker and Compagnie Nationale d’Assurance Agricole du Sénégal (CNAAS) to implement agriculture index insurance projects. An additional planned support to the country includes working with the stakeholders on designing credit scoring methodology with insurance and providing value-chain analysis support including a knowledge component targeting rural, women organizations to increase women’s financial literacy. In the same light, mobile money is also rampant, thus there is an opportunity to leverage this channel to deliver insurance products to rural women by developing a feature for them to save for insurance premiums and make remote payments. This demonstrates how we transfer gender solutions from one project and adapt it to another.
How are GIIF’s activities related to pro-poor principles and addressed to vulnerable populations (making them less vulnerable)?
Insurance is a financial instrument and it alone cannot reduce vulnerabilities of the poorest populations; therefore, various schemes for the poorest populations are often designed as part of government social safety net programs or insurance is subsidized for lower income segments. In some markets, insurance is not used as a standalone solution but is included as part of a package. This approach has been used in Zambia where the government provides input subsidies to farmers to ensure they have access to good quality inputs. The subsidy has an insurance component to reduce the farmers’ exposure to any climate-related risk that would wipe out gains made by the subsidy program.
In Senegal, the government provides a 50% subsidy on insurance premiums, not only to make premium rates more affordable for the poorest, but also to encourage financial inclusion. The subsidy was meant to encourage financial institutions to scale up their financing volumes of the insurance as part of the financing package.
Another example is the project in Pakistan with the Government of Punjab (GoPunjab). As part of its commitment to transform the agricultural and rural sectors, GoPunjab is seeking to improve access for its 5.2m farmers to improved agricultural crop and livestock insurance products and at affordable premium rates. GoPunjab is seeking solutions for all sectors of the farming population, including progressive small-scale farmers who account for about 56% of all farmers in Punjab. For these farmers, there appears to be potential for a strategy linking crop insurance with credit provision, thereby enabling them to invest in improved high yielding verity (HYV) seed and fertilizer technology to achieve higher production and incomes. The Government is also seeking solutions for small subsistence farmers with less than 2.5 acres who account for 42% of all farmers, and for the commercial tree fruit and horticultural farmers. When the World Bank, with support from the GIIF program, completed a feasibility study in August 2017, it highlighted that a “one-size-fits-all” approach will not work and hence recommended tailored solutions based on the risk transfer needs of different types of farmers. Following rounds of discussions, a pilot crop insurance product was launched in April 2018 that complements an existing Federal Government supported agriculture disaster insurance program.
To summarize, we provide tailored solutions that consider the needs, capacities, and demand of the beneficiaries and involved stakeholders to come up with suitable, sustainable, and affordable products. This is at the core of how we operate our projects.