Susan Macmillan in ILRI News: Today, for the first time in Africa, an insurance policy that combines an Islamic-compliant financial instrument with innovative use of satellite imagery is compensating Muslim pastoralists for drought-induced losses suffered in Kenya’s northeastern Wajir County, where livestock are valued at Ksh46 billion (USD550 million).Thirty women and 71 men in arid and semi-arid Wajir are the first beneficiaries of livestock insurance that conforms to the Islamic concept of takaful, in which risks are shared among a group of participants. Through a contract called tabbaru (donation), participants make contributions to a risk fund. In the case of a payout, which happened today, the fund makes payments commensurate with the contributions received.
The pilot program is paying approximately Ksh500,000 (USD5,800) for losses suffered to their herds of sheep, goat, cattle and camels during the long dry season that typically ends in March. The herds were insured last August by Takaful Insurance of Africa (TIA) with an Index-Based Livestock Insurance (IBLI) product, branded as Index-Based Livestock Takaful (IBLT).
IBLI uses satellite imagery—measuring the conditions of grazing lands—that is fed into an algorithm that predicts livestock loses. Predictions beyond the 15-percent level trigger indemnity payments. Drought conditions in much of Wajir County have surpassed the index trigger and active contract holders in these areas were compensated today.
This payout is critical for building confidence in the concept of insurance for the pastoral, drought-prone regions of East Africa, where life revolves around livestock and droughts can bring disaster,” said Andrew Mude, who leads the IBLI program of the Nairobi-based International Livestock Research Institute (ILRI)....
Wajir from the air, shot by lex Maisuradze, Wikimedia Commons, under the Creative Commons Attribution-Share Alike 3.0 Unported license
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