1. Standardize premium rate cover for crop and livestock covered under the national scheme. Premium rates before subsidy ranged between 6-7%, but is now averaging 5% after the Government subsidy.
2. Standardize procedure for approval & settlement of subsidy & farmer claims.
3. Ensure that the same insurance products, terms and conditions are provided to participating farmers and all claims are settled in accordance with agreed and standard practices.
4. Consolidate technical and financial capacity essential to developing suitable products.
5. To ensure a cost-effective approach to product development, policy and claims handling.

How it works

In the past, drought insurance has been based on precipitation. Indemnification of farmers would then take place if precipitation during the growing season would not meet certain pre-defined levels. However, there are few rainfall stations. A very dense and costly network would be required to adequately represent the spatial variability. Moreover, adding rain gauges would not provide for a long precipitation history that is required to assess the drought.

Another limitation is that rainfall is not a good measure of actual crop water use. A considerable part may run-off or may percolate into the subsoil. It is also possible that rainwater is stored in the soil for considerable time and used by the crop with months of delay.

The timing, not just the amount of rainfall during the various growth phases of a plant, is very important for satisfying the soil water balance and therefore the ultimate yield. Dry spells, or deficits over the main phases of crop growth, can cause yield loss, even if cumulative season rainfall is adequate. Drought index insurance monitors crop water availability to determine drought and has a linear correlation with crop yield. It is therefore a much more suitable indicator of agricultural drought than rainfall. The product’s Drought index insurance is based on innovative satellite technology and provides an affordable alternative to expensive traditional loss based crop insurance.

Using 33 years of Meteosat data and near real-time data reception we use drought insurance indices to determine drought payouts per season and continuously monitor drought across Uganda. When there is a drop in the expected average yield of the district due to drought or excessive rainfall, a linear payout is triggered to the extent of the loss experienced due to the drought as monitored by the drought index.