The Feed the Future Innovation Lab for Assets and Market Access (AMA) at the University of California Davis researches policies and programmes designed to help poor and smallholder farmers worldwide. It is one of 24 Feed the Future Innovation Labs across the United States funded by USAID. Associate Director Tara Chiu explains more…
MiN: You joined the MiN relatively recently. Tell us a bit about what you do.
Tara: We work with researchers around the world to design and test innovative ways to help smallholder farmers manage risk, adopt productive technologies and grow economically. About half our portfolio is concerned with high-quality agricultural insurance. Most of our work is across Africa, with some projects in Central and South America, South Asia and Southeast Asia. We typically work in partnership with a host country research institution - local knowledge is absolutely invaluable and means most of the funding can go into actual research.
MiN: What is the 3-D Client Value Assessment Tool that you’ve recently developed?
Tara: Working with the ILO’s Impact Insurance Facility on agricultural index insurance, we developed a tool to effectively assess the value of different products. The 3-D toolkit values both existing products and those in development, using three dimensions - design, distribution and delivery to identify strengths, gaps and areas for improvement. Our particular contribution was Minimum Quality Standards (MQS) and how accurately an index can identify and appropriately compensate farmers for common losses.
We take a ‘do no harm’ approach to developing new products. If you sell low-quality products that don’t provide value, you can accidentally make farmers worse off than if you had done nothing at all. The toolkit codifies things that are often intuitive, but which can get overlooked in the rush to design, deliver and bundle a new inclusive insurance product. This systematised approach to make sure all the boxes are checked is therefore really very useful.
MiN: How far is the Lab involved specifically with inclusive insurance?
Tara: It’s not just about increasing access to insurance, but increasing access to high-quality insurance. For example, we developed the idea of Village Insurance Savings Accounts (VISAs) because of problems selling agricultural insurance just before the start of a new season, when farmers are relatively cash-poor. If someone tries to sell you insurance at that time, even if you want it, you don’t have the money. VISAs encourage farmers to start saving after the harvest of the previous season when they have more cash. We’re now piloting the scheme in Uganda.
We’ve also helped develop index-based livestock insurance in Kenya, some of which is being used by the Kenya Livestock Insurance Program (KLIP). We’re also looking at coupling programmes to lift women out of severe poverty with index insurance to keep them from falling back if a shock occurs. We’re very excited about that.
MiN: What do you think of the MiN’s work on insurance for sustainable development?
Tara: I have been really struck by the different perspectives on microinsurance and the variety of contributions. Seeing all the organisations fit together and work towards a common goal, and how we can contribute to one another’s work effectively, is a big advantage. Last year’s State of Microinsurance, for which we wrote an article, is part of that. If we want a sustainable insurance industry, we have to provide high quality and high value, otherwise farmers will likely turn against insurance and it would be a setback for the market and for development. Insurance can do a lot to raise farmers above the poverty line.
MiN: What excites you most about being part of the MiN?
Tara: It allows us to share our unique contribution to inclusive insurance, to leverage the network, to have people really understand what we offer, and to learn about what others are doing. Through the MiN, we can work to bring it all together - that’s just huge for us. For a start, we can share the MQS calculation spreadsheet and the 3-D client value assessment tool, which are both publicly available.
The MiN helps us combine our knowledge as a research institution with implementers and other organisations, to develop really effective training, presentations, panels, articles and resources. It’s really helpful for us to put ideas out there so people can give us feedback - an interactive loop to get multi-sectoral feedback on our research. We want our research to be relevant and actionable.
MiN: What are the main challenges and opportunities in the current inclusive insurance market?
Tara: We see a deep need for improved agricultural risk management tools. A lot of work has been done to get products quickly to the people who need them, and that sense of urgency has led to a lot of innovation. But it’s time to step back and ask if we are really designing high-quality products. Innovations in remote sensing are completely revolutionising contract design, and from there we need to think about how to deliver these innovations, taking advantage of changes like increased mobile phone penetration and internet access to improve value to farmers across the board.