Since its inception in 2009, ACRE Africa - the Agriculture and Climate Risk Enterprise , which evolved from the Kilimo Salama project, has benefited extensively from GIIF’s financial, technical and operational assistance, continuously enhancing its institutional capacity to underwrite agriculture insurance for smallholder farmers. GIIF’s intervention ranges from providing core insurance trainings and upskilling, which are the backbone of innovative solutions to close the protection gap, to funding relevant WB-led activities including fostering a successful public-private partnership for Kenya Livestock Insurance Program (KLIP) that employs remote sensing technology for over a decade.

 As a long-standing GIIF implementing partner, ACRE has become a pioneer in providing climate risk solutions to rural Africa, facilitating more than 1.7 million contracts and protecting 8.5 million beneficiaries in Kenya, Rwanda and Tanzania. It sets a leading example in agriculture insurance commercialization and the operationalization of a high volume-low margin business model to serve rural communities in Africa. Customer-centric innovation is a key driver of its rapid success.

Notably, ACRE has embraced an innovative business model that makes use of win-win partnerships with mobile network operator Safaricom in Kenya and local input providers to ensure adequate product support and increased trust from farmers. The flagship product is the Replanting Guarantee (RPG) where each maize seed purchase from participating stores comes with insurance coverage. ACRE leverages satellite technology to geotag and monitor farms and Safaricom’s mobile money platform – Mpesa – to make claim payments directly to the farmers’ mobile wallets. Farmers also have the option of receiving an automatic discount on the next seed/fertilizer purchase. This model is being piloted in new value chains and countries.

In order to improve affordability and enable more farmers to experience benefits of insurance in the nascent market, ACRE introduced Bima Pima - a weather index insurance product with flexible sums insured and premium payment terms. Farmers can now select the value of insurance they can afford with the option of paying premiums in small amounts spread over time. For instance, with an initial payment of $0.5, farmers can choose subsequent top ups from as low as $0.1 depending on their financial situations. The technology infrastructure ACRE has developed automates the insurance process from policy issuance to claim settlement, keeping administrative costs low which translates into lower premium for farmers in need.

One of the biggest challenges in the agri-insurance sector is customer retention due to frequent delays in payout processing. ACRE’s field experience shows that timely payout after weather adversities can contribute to a 30% increase in policy renewal. ACRE is now piloting a blockchain solution that would enable payouts to be sent to eligible farmers’ mobile accounts within seconds. Each insurance policy would be plugged into smart contracts on a blockchain and indexed to local weather. If an extreme weather event as defined in the contract occurs, payments are automatically triggered on the technology platform, which facilitates timely and fair payouts through mobile money. This new initiative involves new partners such as Etherisc, a smart contract developer, and Sprout Insure, a digital insurance platform provider. Successfully implemented, the automation is likely to reduce policy issuance costs by 40%, which translate into 30% premium reduction.

Additionally, to improve product quality, ACRE has been using localized measurements produced by GIIF-sponsored weather stations for satellite data validation (also referred to as ground-truthing). In addition to the usual rainfall-based indices, the soil moisture index is being tested to finetune correlation between meteorological events and agricultural production. The company plans to install soil moisture sensors in its weather stations to complement remote sensing data and strengthen its index-based product offering.

In summary, ACRE continues blazing a trail in de-risking smallholder farmer production and improve rural livelihoods through creative partnership, new technology and data.

Bima Pima – Weather Index insurance in small installments

ACRE Africa piloted a mobile money-based weather index insurance product that allows farmers to pay for insurance in small affordable bits through their mobile phones. This product is packaged as a scratch cards so farmers can purchase it at agro dealers just like any other farm inputs. Farmers paid an initial amount of $0.50 cents and made subsequent top ups from as low as $0.10 cents. Over 50% of farmers topped up and bought an average of $2 each.

Watch Bima Pima testimonial.

Photo: Jemimah Anyango receiving her payout from ACRE Africa in 2019.

Photo credit: ACRE