Weather Insurance Mitigates Risk: Malawi
This paper describes a pilot project on weather insurance that was introduced to mitigate risks of peanut farmers in Malawi.
The paper elucidates the effort made by National Smallholder Farmers' Association of Malawi in partnership with the Insurance Association of Malawi to design an index based weather insurance policy. The technical assistance was provided by World Bank and Opportunity International.
The paper also highlights the effort by Opportunity International Bank of Malawi (OIBM) and Malawi Rural Finance Corporation in promoting the product.
Discussing the effect of the pilot in four districts, the paper states that:
- 892 farmers purchased the weather insurance;
- Banks were allowed to expand their lending portfolio;
- Government was planning to extend the coverage to additional crops in other parts of country.
The paper mentions the following factors responsible for success of the project:
- Willing lenders such as OIBM;
- Presence of farmers association for mobilizing the farmers;
- Existence of donor providing technical assistance;
- Qualified staff with relevant insurance background;
- Approval by the weather stations to provide data to stakeholders during the contract period;
- Insurer's willingness to write non-conventional covers.
The paper concludes by stating that OIBM is receiving additional support and funding from the World Bank to build on its rural outreach efforts through weather insurance pilot.