Innovative Insurance Products Help Farmers Guard Against Climate Shocks

For farmers in Senegal, a successful harvest largely depends on the amount of rain that falls during the growing season. More than two-thirds of the sector is entirely rain-fed, exposing smallholder farmers to a high level of volatility—a risk that has increased due to climate change.

To help farmers protect their livelihoods against weather-related crises, the National Agricultural Insurance Company of Senegal (CNAAS) has developed innovative “index-based” insurance products that use satellite-based weather data to determine compensation payments. This helps farmers regain their footing faster after a weather-related loss and increases their financial security.

Mame Fatin Gueye, an agricultural entrepreneur and former university lecturer, met with the UNSGSA during her June visit to Senegal. Ms. Gueye obtained livestock and crop insurance from CNAAS for the agro-pastoral farm project she is running on her land in Sébiponty. She also provides training for younger people on farming techniques.

“CNAAS has provided me with affordable insurance products that protects me against a wide variety of risks, including crop failure and death or illness of my livestock. It has proven critical to give me the tools to succeed as a farmer and promote my vision of providing organic quality food to local communities in Senegal,” Ms. Gueye told the Special Advocate.

In 2020, 10% of all farmers in Senegal were covered by CNAAS’s index-based insurance, with an average premium of 5000 CFA francs (about US$8) and an average insured capital of 200,000 CFA francs (about US$327). Customer satisfaction has been strong, with 90% of groundnut farmers indicating that they will renew their policy for another year.[1]

CNAAS is a public-private partnership whose largest shareholder is the Senegalese government, which also subsidizes premiums up to 50%. In addition, the state has granted a tax exemption of insurance contracts to allow the poorest citizens to have access to insurance. CNAAS works closely with the Banque Agricole, which introduced insurance as part of their financing strategy to smallholder farmers and small businesses along the agricultural value chain.

With the rapid increase in mobile phone ownership in Senegal—estimated at 33% of the population—CNAAS is also looking to develop mobile insurance solutions to help farmers access these products even more easily.