The Nepali microfinance institution Jeevan Bikas Laghubitta Bittiya Sanstha, Swiss insurance technology (insurtech) firm Pula and the UN Capital Development Fund (UNCDF) recently announced the completion of a pilot program combining technical assistance, subsidies and financial education to design and deploy an index-based insurance product for Nepali smallholder farmers. The program provided 15,000 smallholder farmers with insurance covering crops valued at USD 4 million. In addition, 70,000 smallholder farmers accessed education on index insurance, and 10,000 farmers received agricultural training. A key element of the effort was coordinating with Beema Samiti, Nepal’s insurance regulator.
The insurance reimburses farmers for up to 70 percent of their average annual yield if excessive rainfall, drought, excessive heat, frost, hail, pests or diseases cause their yield be at least 30 percent below their yearly average.
“The pilot project used digital technologies to deliver training to the farmers, and UNCDF sees a clear opportunity to use digital innovation to scale up the uptake of this type of insurance,” said Maria Perdomo, UNCDF Regional Coordinator for Asia. “It is important that financial service providers bundle area yield index insurance with other services such as loans and savings. This will make the product easier to deliver for a financial institution, which in turn will increase the uptake of the insurance.”
Jeevan Bikas provides loans, savings, insurance and remittances to 300,000 clients through 159 branches.
Established in 2014, Pula specializes in the creation and deployment of agriculture insurance and technology to smallholder farmers in Africa and Asia. Financial data on the firm are not available.
Established in 1966 and headquartered in the US city of New York, UNCDF endeavors to create opportunities for poor people and their businesses by increasing access to microfinance and other forms of investment capital. The organization operates in 46 low-income countries in Africa, Asia and the Pacific with a particular focus on countries emerging from crises. In 2021, UNCDF reported total donor contributions of USD 138 million.
Sources and Additional Resources
UNCDF program description
https://www.uncdf.org/article/8193/bringing-agricultural-insurance-to-climate-vulnerable-farmers-a-unique-pilot-program-in-nepal-shows-how-to-unlock-the-benefits-of-index-based-insurance-for-smallholders
Pula LinkedIn profile
https://www.linkedin.com/company/pula-advisors/about/
Pula homepage
https://www.pula-advisors.com/
Beema Samiti homepage
https://nib.gov.np/
Jeevan Bikas homepage
https://jeevanbikasmf.com/
UNCDF homepage
https://www.uncdf.org/
Previous MicroCapital story on Beema Samiti
https://www.microcapital.org/microcapital-brief-beema-samiti-of-nepal-to-sidestep-cabinet-to-allow-traditional-insurers-to-offer-microinsurance-starting-in-july-2014/
Previous MicroCapital story on UNCDF
https://www.microcapital.org/microcapital-brief-opec-fund-donating-1m-to-uncdf-to-boost-energy-access-reduce-emissions-starting-in-madagascar-tanzania/
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