Amina Ibrahim has twice lost half her herd of cattle to drought.
In March 2012 when her village, Tullu Roba, in Isiolo Central was hit by drought, she set out on a journey towards Meru in search of pasture and water for her cattle.
On the way, she lost 11 of her 32 cows. “Some of my cows were too weak to reach there,” she recalls. She was to return to her village a month-and-half later a sad woman.
Then one day she was listening to a local radio station and happened to hear an advert calling upon farmers to subscribe to an insurance package that would safeguard them against losses of their herds.
Amina subscribed to the insurance policy in September 2013 and she has since been compensated twice in March and October last year for her losses.
The pastoralist is one of the many livestock farmers in North Eastern who are reaping from insurance cover as companies innovate.
Besides the normal insurance cover, firms have introduced packages that are Sharia compliant.
“I pay Sh1,880 per cow as premium for an entire year. I have insured all my 30 cows. We get compensated whether the animals die,” she explains, adding “Determination of the claim is dependent on the degradation of forage by harsh weather.”
For the Sharia-law compliant policy, the cover conforms to the Islamic concept of takaful in which risks are shared among a group of participants through a contract called tabbaru (donation). Participants make contributions to a risk fund.
When a payout is done, the fund makes payments to those who suffers losses, commensurate with the contributions received.
The yearly contract is sold just prior to the start of the rain seasons in March and October, Amina explains, adding that the more heads of cattle one insures, the more money she gets as compensation.
But rather than cover the risk based on the number of cows, her policy is unique in that it is solely dependent on degeneration of forage in the area of the insured.
Through a system called Index Based Livestock Insurance, which uses satellite imagery to measure conditions of grazing lands, details are fed into an algorithm that predicts livestock losses. Predictions beyond the 15 per cent level trigger indemnity payments.
The index-based cover is designed by the International Livestock Research Institute (ILRI), together with technical partners from Cornell University and the University of California Davis, for pastoralists in Kenya.
“The colour of the forage tells us how adversely an area is affected and that is the information used to compute the pay out,” says Robert Shivan, ILRI market and capacity development assistant in-charge of Wajir, Marsabit and Isiolo.
So far, about 4,000 pastoralists in northern Kenya have bought insurance covers.
“Our goal is to show pastoralists that they can use a fair and ethical business model to protect their assets from a natural hazard of keeping livestock,” says Hassan Bashir, the CEO of Nairobi-based Takaful Insurance.