The Insurance Works!

Jacinta on her maize farm

When making the decision to purchase crop insurance, one of the topmost questions in a farmer’s mind is “does insurance really work? In the event of a catastrophe, will insurance really pay me?” Read Jacinta Mutuse’s story below. Jacinta is a smallholder farmer from Wote, Makueni County.

“When the money came through my phone via M-Pesa[1], I was certain it was a mistake. I thought someone had erroneously sent me money, so I waited for the sender to call me and demand that I return the money,” Jacinta narrates.

She had just received about KES 900 (USD 9) as a payout for the Replanting Guarantee (RPG) Weather Index Insurance (WII) product.

WII is a form of protection for farmers against undesirable weather events such as delayed rains, drought and excess rainfall which causes production losses. WII relies on actual weather data and compares it to the expected rainfall for each stage of production to determine the amount of loss that has occurred on the ground in order to make compensations. This product does not require any field visits which makes it more affordable compared to any other crop insurance product.

ACRE Africa’s RPG product is one example of a WII. It covers the risk of poor rainfall during the crop’s germination phase that necessitates replanting. A farmer buys a packet of seeds/fertilizer, and then enters a unique code to register for insurance. ACRE Africa monitors the weather at the farmer’s location. An insurance payment is triggered if the weather index indicates the occurrence of adverse weather conditions at the germination phase.

That is how Jacinta received the automatic payout. About a month before, Jacinta had purchased 10 bags of maize packets from her local agrovet. When she learned about the insurance attached to that particular maize variety, she was a little skeptical.  However, she still registered and planted her seeds over the next few weeks. She initially planted two bags, and then after a few weeks, planted the remaining eight bags. Adverse weather conditions registered on the days she planted the first two bags.

“When no call came through after I received the money, I called the ACRE Africa customer care line as indicated on the insurance card. I was then informed that the money was not a mistake. I was very excited. I was also very happy to get the money without me having to contact anyone” Jacinta narrates.

Timely claim settlement through the RPG product allows the farmer to purchase another bag of seeds and plant within the planting window, so as not to miss the entire planting season.

However, Jacinta opted to meet other household needs instead of buying another packet.

“I paid a debt with the money. Since it was still not raining in my village, I did not buy another packet of seed,” she explains. “This money was beneficial to me. I did not have to go through a double loss when the rains failed,” she says.

The 35-year old farmer and mother of one also grows beans, green grams, oranges and vegetables on her 3-acre piece of land. Jacinta mostly farms for subsistence farming, and when she has extra harvest, she sells it at the nearby Wote market.

“The insurance works!” Jacinta says.

[1] M-Pesa is a mobile phone-based money transfer, financing and microfinancing service launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania.

- ACRE Africa