APA Insurance Ltd - Kenya

APA Insurance Ltd (APA) is an insurance company with about 355,000 clients insured by the 2 initiatives presented for the 10th European Microfinance Award.

The Context

The agriculture sector (including crops and livestock) is one of the most important sectors of the Kenyan economy and is the main source of livelihoods for the majority of Kenyan people in terms of food security, economic growth, employment creation, off-farm employment but also foreign exchange earnings. The sector however, is frequently experiencing the impact of climate change, including increasing frequencies of flooding and droughts, and changing rainfall patterns. As a consequence, the yields of some crops, but also livestock numbers are decreasing.

Over 75% of Kenyan farmers are smallholder subsistence farmers who are highly vulnerable to the economic effects of natural disasters; particularly due to the dependence on rain-fed agriculture and low resilience.

The Initiative

APA offers 2 agriculture insurances to its clients, both supported by the governement of Kenya, amongst others for AYII:

Index based livestock Insurance (IBLI)

Livestock is the principle asset and key source of income in northern parts of Kenya which is mostly arid and semi-arid land. APA has been implementing IBLI programme since year 2015 in Kenya. IBLI insures pastoralists against forage deterioration that can lead to drought, resulting in livestock deaths. Forage availability is determined by satellite data. With the help of this solution pastoralists are now able to buy forage to keep the livestock alive or transport them to better grazing places during the drought situation.

Area Yield Index Insurance (AYII)

AYII product pays out claims to farmers when the average yield in their area falls below a set level, regardless of the actual yield on each client’s farm. This agriculture insurance protects farmers against the damage to the insured growing crops due to excessive rainfall, flood, frost, hail damage, excessive heat wave, windstorm, uncontrollable pest and diseases, and drought.

Agriculture insurances