Micro-Insurance for Protecting Smallholder Farmers

ACRE has become the largest agriculture insurance program in sub-Saharan Africa and the first to leverage mobile technologies to reach smallholder farmers. The primary function of ACRE is to act as a connecting and coordinating agent between local insurance companies and smallholder farmers. ACRE tracks weather-related repayment risk, and encourages insurers to offer a variety of insurance products tailored to smallholders’ needs. In doing so, its activities have also paved the way for larger credit institutions to enter the agricultural insurance and reinsurance market.

For example, ACRE’s replanting guarantee provides drought insurance coverage on individual bags of seeds. The coverage on each bag is activated by texting a code to ACRE and paying the insurance premium via mobile. ACRE then monitors conditions on the farm via satellite imagery for 21 days. In case of drought, farmers are compensated directly with money to their phones.

Why you should care

Over 96% of agricultural land in Kenya and Rwanda is rain-fed and vulnerable to variable rainfall and drought. Consequently, finding viable and affordable ways to manage these weather-related risks is of great importance to food security and economic stability. The insurance products and technologies developed by ACRE offer an approach capable of reaching thousands of remote farmers without amassing high transaction or delivery costs.

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