Oromia Insurance Company (OIC), one of the youngest financial institutions, launched a new micro-insurance product for pastoralists.
The insurance firm, which was incorporated in January 2009, has commenced the Index Based Livestock Insurance (IBLI) pilot project for Borena pastoralists, who have been suffering from persistent droughts. Tesfaye Desta, President of OIC, said that the insurance and other stakeholders have taken close to two years to introduce this new product to provide relief for pastoralists located in Borena, southern Oromia.
To mitigate the devastating effects of recurrent droughts on the Borena pastoralists the International Livestock Research Institute (ILRI), Cornell University, OIC and Oromia Credit and Saving Share Company are working together to commence IBLI. “The two international partners have given their technical support to start the scientifically based project,” Tesfaye told Capital.
According to experts at ILRI, this kind of insurance is only available in northern Kenya.
According to OIC president, IBLI insures the pastoralists against drought related livestock deaths only and it also covers cattle, camels, goats and sheep.
The index is currently constructed by ILRI, international organization dedicated to improving pastoralist livelihoods through innovations in livestock risk management, while the two local financial firms provide the insurance cover.
According to OIC, eight weredas at Borena will be included in the pilot project.
“In one wereda at least 200 households will be part of the pilot project based on our projection. But the area has over 16 million livestock,” the president explained. He said that the insurance company has a plan to expand the service to other areas of Ethiopia. Yabello town, Borena Zone, was visited by government officials and stakeholders on Saturday July 21 to witness the launch of the insurance coverage.
OIC is one of the two insurance firms that introduced micro-insurance to Ethiopia. It began in July 2010 by issuing Multi Peril Crop Insurance Policies to different Farmers’ Cooperative Unions in Ambo, Meki Batu, Becho Woliso, Lume Adama and Erer. The policy covered staple crops against loss or damage caused by multiple perils including drought, hailstorms, excessive rainfall, flood, frost, fire and lightning.
They also have been involved in creating Multi Peril Livestock Insurance in November 2010 to cover the death of livestock due to disease or accident. They also developed a Weather Index Crop Insurance in May 2012 in collaboration with Busa-Gonfa Microfinance Institute for farmers around Koka, Shashemene and Bako Tibe areas.
Nyala Insurance Sh. Co was the first firm that introduced farmers’ insurance coverage working on micro-insurance and crop insurance for small scale farmers.
OIC has registered a gross written premium of 157 million birr for the fiscal year that ended June 30, 2012. The company has 200 million birr in authorized capital and 85.3 million birr in subscribed capital. Currently the number of OIC shareholders has reached 545.