Since this summer ICCCAD partnered with WorldFish to identify and facilitate the diffusion of knowledge and best practices on index insurance in Bangladesh. Index insurance is a means of risk transfer that allows weather related risks to be insured. Weather index insurance is based on a pre-defined weather event which when triggered ensures automatic payout to farmers who have taken out insurance. For example the climatic trigger could be a predefined consecutive number of days where rainfall is below a set level or when floodwater level reaches above a certain point. Although index insurance has been operating for 10 years in other countries, it is relatively new in Bangladesh.
Currently there are a handful of organisations that are either piloting or scoping the viability of index insurance products in Bangladesh. ICCCAD produced a scoping report which describes the state of index insurance in Bangladesh and gives more details about current projects. The scoping report was conducted to inform the design and objectives of a two-day workshop on 8th and 9th September in Dhaka. Experts and practitioner working on index insurance and aimed to facilitate knowledge sharing and capacity building among relevant organizations attended the workshop. One of the key objectives of the workshop was to be action-oriented and seek to advance the index insurance agenda. A workshop report will be published shortly.
The key outcomes of the workshop were:
- Mapping the current status of index insurance in Bangladesh
- Better understanding of the opportunities and challenges in implementing index insurance
- Identification of stakeholders
- First step in forming a community of practice
- Demand for future meetings to share information on index insurance
- Workshop report with recommendations for future actions
An important outcome of the workshop is the formation of a community of practice where stakeholders can keep up to date with developments, share experiences and work together to unravel challenges, it is the first time a country has come together to do this. The community of practice has an online forum on LinkedIn where some interesting discussions have already begun.
As index insurance pilots are beginning in Bangladesh, it is at an exciting phase where unique challenges are being faced trying to implement index insurance products in the context of Bangladesh. It will require government, private insurance companies, technical experts, NGOs and farmers to all work together to make index insurance a feasible tool to protect against climate risk. More can be found on the ICCCAD index insurance website page.
Written by: Tajbee Ahmed, Index-based Insurance Coordinator, ICCCAD Newsletter November 2013