FESA Micro-Insurance: Crop Insurance Reaching Every Farmer in Africa

This report discusses and demonstrates the utility of Meteosat (geostationary meteorological satellites) data for the purpose of a project that aims to develop a satellite based agricultural insurance system that reaches every farmer in Africa. It showcases the development and implementation of drought and excessive precipitation insurance based on Meteosat derived indices. The report states that Meteostat has several operational advantages that lead to high cost efficacy and allow for relatively easy insurance scaling up. Key points made include:

• Index-based insurance is a good alternative to the expensive traditional crop insurance although there are intrinsic and spatial basis risks involved;
• Satellite-derived data can possibly address the risks involved in index-based insurance. Satellites provide a dense grid of measurements, from which the relevant data that correspond to the location of the insured can be selected. Such data are uniform and objective and can be low cost as they come from a single source;
• On the basis of data that was found to be uniform, objective, validated and abundant, the report concludes that the Meteosat derived relative evapotranspiration (RE) and cold cloud duration (CCD) indices provide an excellent alternative for a precipitation based approach.