Agricultural Insurance Evidence Program

Agriculture is a major source of sustenance for rural populations in low- and lower-middle income countries. But owing to weather, pests, diseases and price fluctuations, farmers face numerous risks, including crop and livestock losses. In recent years, agricultural insurance has gained increased attention as a tool for social protection, providing smallholder farmers and their households with much-needed safety nets by transferring risk to a third party. Despite their widespread adoption, there is a dearth of evidence on whether these insurance products are successful in improving smallholder farmers’ welfare. To close this gap, 3ie is supporting the generation of policy-relevant evidence on factors that affect successful uptake of agricultural insurance among smallholder farmers.

Agricultural Insurance Evidence Program

Many of the world’s estimated 500 million smallholders, who produce around two-third of the world’s food supply, remain trapped in poverty. The vast majority of them – especially women – operate on a subsistence basis and suffer from low productivity, weak access to markets, and inability to withstand shocks. Getting new technologies and risk mitigation interventions into the hands of farmers is essential for giving farmers the tools to weather such risks.

The Agricultural Insurance Evidence Program seeks to support impact evaluations which provide robust evidence on technology and risk insurance adoption in different contexts. The program also seeks to increase awareness of what works in delivering technology and risk insurance services to build farmers’ productivity, incomes, and resilience to climate change.

The Program, which will run until 2023 and is jointly funded by FCDO (UK) and BMGF, includes both agricultural insurance products and those that bundle insurance with other financial or non-financial products services

Project title: Enhancing access to index-based weather agricultural insurance in Burkina Faso - A new marketing approach
Grant-holding institute: Innovations for Poverty Action
Study design: RCT with cluster randomization
Synopsis: This study seeks to understand the viability of a new insurance marketing and outreach scheme focused on urban areas, and whether urban migrant relatives influence their rural family members' knowledge and uptake of insurance and, ultimately, decision-making capabilities. The study contributes to a unique evidence base in that it explores the dynamics between households with migrant family members - an area of research that is increasingly relevant due to urbanization and migration.

Project title: Creating informed demand and impacts through innovative and cost-effective extension
Grant holding institute: International Livestock Research Institute
Study design: RCT with household-level randomization  
Synopsis: This study examines low-cost, innovative approaches to increase the efficacy of extension services and increase insurance product knowledge and uptake among female farmers. The extension services are layered within a poverty graduation program and discount insurance coupons are offered seasonally.

Project title: Picture-Based crop insurance: evaluating the impacts of using smartphone camera data for claims verification in India
Grant holding institute: International Food Policy Research Institute (IFPRI)
Study design: Mixed-methods RCT with cluster randomization 
Synopsis: The goal of this evaluation is to understand whether improved insurance products have an effect on lowering basis risk in agricultural production and increasing technological adoption. The PBI intervention is an app which addresses information asymmetries and cost drivers for both farmers and insurance companies. Additional aims include understanding whether the intervention affects farmer behavior for different types of crops (tomato versus wheat). Tomato farming represents high profitability, high risk investment cropping and is absent from coverage within the national crop insurance scheme (Pradhan Mantri Fasal Bima Yojana).

Project title: Bundling weather-index based insurance with loans in Senegal: an evaluation of impacts on insurance take-up and farmers’ well-being
Grant holding institute: Université Gaston Berger
Study design: Propensity score matching at household level
Synopsis: This study contributes to an evidence-informed strategy at the national level in Senegal by examining the impacts of weather-index insurance bundled with agricultural loan products in Senegal. The primary aims include understanding which products are more likely to sustain take-up of insurance and credit, how insurance coverage affects adoption of higher return investment strategies and productivity of smallholder farmers, and how the bundled product influences recovery after a rainfall-related shock. 

Project title: Uptake and evaluation of innovative insurance embedded credit for promoting resilience and livelihoods for smallholder maize and wheat farmers in Kenya
Grant holding institute: International Food Policy Research Institute (IFPRI)
Study design: RCT with household-level randomization
Synopsis: This study evaluates an innovative, market-based credit solution that embeds within its structure an insurance contract, called Risk Contingent Credit (RCC), for maize farmers in Kenya. It eliminates the need for borrowers to provide collateral as a condition for accessing credit, which reduces barriers to accessing credit while increasing financial inclusivity.

Project title: Khetscore: a cluster randomized trial on the impacts of using digital technologies to unlock risk contingent credit for marginal farmers in Odisha
Grant holding institute: International Food Policy Research Institute
Study design: Mixed methods Study
Synopsis: This study evaluates the impacts of a digital risk-contingent credit product targeted to small and marginal farmers in Odisha, India. Satellite imagery and georeferenced photos of crops are used to rate loan applications, monitor disbursed loans, and insure farmers’ loans for damage to crops using a novel methodology, KhetScore. The study will examine whether a microfinance institution can cost-effectively rely on KhetScore-based credit scores and in-person visits and whether this approach improves farmers’ access to agriculture credit and insurance.