Securing harvests against drought: the role of index insurance
As part of ADA’s Farmer 2.0 (F2.0) programme, Compagnie Nationale d'Assurance Agricole du Sénégal (CNAAS) and the insurtech IBISA are collaborating to provide a rainfall-based insurance product for smallholder farmers. In this interview, Awa Constance Touré (CNAAS) and Jérémy Lefevre (IBISA) discuss the challenges and benefits of this initiative.
What is the role of your organisations in this project?
Awa Constance Touré (ACT) - CNAAS :
CNAAS is the only company specialising in agricultural risk cover in Senegal. We are a benchmark in the sub-region. We have already worked with ADA to facilitate access to agricultural insurance for new financial institutions. The aim of this new phase is to develop an index-based product specifically for farmers supported via the F2.0 platform.
Jérémy Lefevre (JL) - IBISA :
IBISA is an insurtech specialising in the design of parametric insurance products based on satellite data analysis. We design the products, calculate the indemnities via our digital platform and support their operational implementation. We work with ADA and CNAAS to ensure efficient distribution in direct contact with farmers.
How does index insurance work?
ACT : This product automatically compensates farmers if there is insufficient rainfall during a critical period. Furthermore, thanks to the F2.0 platform, we now have access to much more detailed data: we know the exact number of farmers involved and their share of the financing, and we can track subscriptions and compensation payments in real time.
JL : Parametric insurance offers rapid, objective and transparent compensation based on verifiable climatic data. Everything is automated. As soon as the predefined precipitation deficit threshold is reached, compensation is triggered automatically, without the need to file a claim.
Parametric insurance is generally more affordable than traditional insurance because it limits the costs associated with on-site surveys.
For smallholder farmers, this means receiving support quickly after a climatic event, without having to go through complex administrative procedures or experiencing lengthy delays.
What are the challenges in deploying this type of product?
ACT : Lack of visibility remains an obstacle. Some financial institutions are still reluctant to commit, despite the advantages. For farmers, insurance is still seen as an expense. This project will enable them to compare their situation with and without insurance and better understand its value.
JL : For many smallholder farmers, insurance remains an abstract concept. Expectations can be disconnected from reality: they contribute little but expect large indemnities. It is therefore vital to clarify what insurance can and cannot cover, and demonstrate its value, even in claim-free years.
How are you adapting this solution to local realities?
JL : Parametric insurance is highly flexible. It can be adapted to local climatic conditions such as rainfall and heat, as well as crop cycles. We work closely with local partners to identify the right indicators, test the models, and adjust the trigger thresholds. This joint development process is essential if the product is to be truly useful.
How do you see the future of index insurance?
ACT : The Senegalese government invests heavily in agricultural campaigns. Incorporating insurance into this funding would make these public investments more secure. With climate uncertainties on the rise, agricultural insurance is becoming a necessity. It needs to be seen as an input.
JL : The future of climate insurance lies in its seamless integration into existing agricultural and financial services. Initiatives such as F2.0 provide an ideal framework for this type of integration. It must be quick to activate, based on open data to guarantee transparency, build trust and maximise its impact.