Shamsa Kosar, a beneficiary of Takaful insurance in Wajir, northern Kenya, in Mar 2014 (photo credit: ILRI/Riccardo Gangale)

Index-Based Livestock Insurance (IBLI) is the world’s first index-based insurance designed to protect vulnerable pastoralists in drought-stricken areas from losing their primary asset—livestock. First developed by the International Livestock Research Institute (ILRI) to insure pastoralists in Kenya and Ethiopia, this specialized insurance product has had a considerable impact on the asset base and consumption activities of its intended beneficiaries—nomadic populations living in an expansive area.

See ILRI capacity development brief 6, Capacity development in the Index-Based Livestock Insurance project

IBLI represents an exciting innovation by offering insurance to vulnerable rural smallholder farmers and livestock keepers and potentially reducing the climate-related risks they face. Initial analyses of IBLI projects have shown that insured households experienced: a 25% reduction in likelihood of poor nutrition; a 36% reduction in ‘distress sales’ of livestock (selling livestock to provide quick income in times of hardship); and a 33% reduction in reliance on food aid when compared to uninsured households. However, despite its ability to deliver social and economic returns to a population—traditionally neglected by financial services firms—IBLI’s uptake has been slower than expected.

This latest ILRI brief describes the opportunities and challenges emerging from the IBLI project. It looks at the various pressures from the market, governments, donors and partners related to IBLI’s growth strategy and future sustainability.

For more information, see ILRI capacity development brief 6, Capacity development in the Index-Based Livestock Insurance project

This brief was published as part of an internal ‘capacity development’ week at ILRI in December 2015.

See all the ILRI capacity development briefs