The idea of index insurance for promoting resilience is simple. At a low cost, insure rural families against perennial catastrophes like drought that would otherwise make or keep them poor. In practice, too many index insurance contracts fail when families lose their livelihoods to disasters.
This failure is a major risk to governments and donors investing in index insurance as a means of protecting rural families from the worst effects of climate-related disasters. Without a way to know beforehand whether a product is likely to fail means it is possible investments in these products make families worse off than if they had no insurance at all.
Quality Index Insurance Certification (QUIIC), is now available in eastern and southern Africa to certify that existing or planned index insurance products and interventions will work as promised. An initiative established by USAID in 2018, QUIIC is an independent collaboration between researchers at the University of California, Davis and Kenya-based Regional Center for Mapping of Resources for Development (RCMRD).
The QUIIC analysis uses historical index, yield and household data to estimate the likelihood a contract will fail and whether it is likely to fail when families are most in need. QUIIC certification is based on an objective quality measure that determines whether an index insurance contract is likely to leave families better off than having no insurance at all. QUIIC also provides guidance on the factors that affect whether a contract achieves this minimum level of quality.
For national governments and insurance regulators, QUIIC eliminates the need for investments in special training or analysis to assess whether an index insurance policy is a worthwhile investment. QUIIC can also cut uncertainty when required prior to receiving government or donor support regulatory approval.
For the rural families index insurance products are designed to protect, QUIIC offers a sense of security that the protection provided on their behalf will protect them in the event of a disaster. As more governments and donors adopt index insurance, QUIIC certification provides confidence their investments truly will benefit the families it seeks to protect and make resilient.
For more information, visit https://quiic.ucdavis.edu