Competition winner: Using Satellite Data to Insure Livestock
Who – the protagonists
Andrew Mude, Team Leader for the Index-Based Livestock Insurance Program (IBLI), developed by the International Livestock Research Institute (ILRI).
Index-based Livestock Insurance (IBLI) protects poor pastoralists in Africa against the risk posed by severe drought. By providing them with insurance, IBLI helps reduce poverty and improve food security. IBLI emerged from an ongoing research effort by ILRI, an organisation dedicated to the sustainable use of livestock.
While insurance products abound for other markets, poor pastoralists, who can often lose everything because of drought, have almost zero insurance available to them. IBLI is one of the first market-mediated index-based insurance products in the world. It was designed and implemented by ILRI and its partners to fill a vital need in the market, and to protect livestock owners from drought-related asset losses.
IBLI was first sold in Northern Kenya's Marsabit District in 2010. After a severe drought in 2011, IBLI made its first payout, which was a resounding success.
The insurance programme was aimed at millions of poor pastoralists in Kenya and Ethiopia who often lose livestock – their primary asset – during severe droughts. It had a substantial positive impact on those who took advantage of the scheme, but uptake was lower than expected. The biggest reason for low sales initially was a change to the compensation structure for sales agents (Village Insurance Promoters). However, despite refining the programme, sales did not substantially improve.
‘Which is the best way to expand IBLI into a sustainable, well-received product? Should the IBLI team focus on strengthening the programme in Kenya, or on expanding into new territories? Is it possible to do both successfully?’ – Andrew Mude
The goal was clear: to grow IBLI. But when and how should this growth take place? If IBLI stayed in Kenya, how could it keep donors happy and build a sustainable programme? If they moved to new countries, how could they use their insights to be successful elsewhere, while ensuring that the Kenyan and Ethiopian programmes were not adversely affected? Could they do it all, or would they have to choose? Being either overzealous or overcautious could harm IBLI. As ILRI’s senior management team gathered together to plan for 2015-2017, it was time for Andrew Mude to present a clearer, better direction for IBLI.
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Iddo Dror, Shreya Maheshwari and Andrew Mude
The authors explain their reasons for writing this case and how students react to it in class.
We are delighted to get this recognition. While we’re no strangers to publishing – as a research institute that’s our ‘core business’ – this was the first MBA-style case we produced.
We at ILRI and the CGIAR believe this case holds many lessons for good management practices. It is pertinent to organisations in finance, development and governance.
It also raises awareness about the challenges of serving those at the bottom of the pyramid and what it takes to improve the lives of over two billion smallholder farmers. We want to expose business students to those challenges in international business development that they may not typically be aware of.
I (Iddo) am also a visiting professor at the International Organizations MBA (IOMBA) programme at the University of Geneva, and frequently use cases in my course. Cases on innovative financial products at the bottom of the pyramid are relatively scarce, and as I don’t like ‘recycling’ cases over and over, we thought IBLI would make for a great addition to the course, and would at the same time help promote IBLI to a wider audience.
Case authoring – fun and useful
Writing the case was a lot of fun, and also a very useful process for synthesising the key management dilemma for IBLI. We’d encourage those contemplating writing a case to go ahead and give it a shot. Remember to keep your audience in mind, and give them just enough ‘substance’ so they can delve in, while not giving away too much by way of a clear path. In our test classes, the students were literally split down the middle on which way IBLI should go – this made for great debates and allowed us to drill down on the various layers of decision making.
We have created a dedicated teaching website to accompany the case, with several resources to help faculty plan and teach this case with ease. As a promotional offer, the first 25 faculty members who include this case in their curriculum in 2016 will benefit from free individual tutoring sessions with Dr Iddo Dror, the lead author of the case. He’ll offer first-hand tips on how to best use the case and tailor it to specific classes. Sessions will be conducted via Skype, and will be limited to three per month on a first-come-first-served basis. For more information contact email@example.com
About the authors
(This case was featured in a recent issue of Connect, The Case Centre’s newsletter)