Index-based livestock insurance as an innovative tool against drought loss: Good practices and impact analysis from northern Kenya

Index-based livestock insurance (IBLI) is a donor-funded programme aimed at designing, developing and implementing market-mediated, index-based insurance products to protect livestock keepers, particularly in the drought-prone arid and semi-arid lands (ASALs), from drought-related asset losses. The IBLI index is based on satellite data, which measure the quality of the pastureland every 10–16 days. These data are inputs to a statistical model of livestock mortality developed using historical data from the region. When evolving range conditions predict livestock mortality in excess of a critical threshold (say 15%) over a predetermined area, the insurance pays contract-holding pastoralists for their losses, allowing them to manage their individual risk. The programme operates under the International Livestock Research Institute (ILRI) and is delivered by several private sector insurance providers, with financial support from the United Kingdom Department for International Development (DFID), Australia’s Department of Foreign Affairs and Trade and the European Union.