| Project Detail |
Bangladesh lacks the institutional framework for inclusive insurance market development, including the re-insurance capacity required for agricultural and disaster insurance. But the Government shows interest in insurance as an effective and cost-efficient instrument to enable farmers to invest in higher value crops and livestock, and mitigate their high vulnerability, thereby complementing social safety nets. The Bangladesh Agricultural and Disaster Insurance Programme (BADIP) aims at (1) unlocking the entrepreneurial potential of farmers through insurance and thus triggering income and employment effects, (2) the emergence of an inclusive agricultural insurance market, and (3) creating an enabling institutional and regulatory framework. The Programme will consist of modular components for the development of pro-poor social business models for crop, livestock or other agriculture/ disaster insurance, and for capacity building of public, civil society and private insurance sector stakeholders. Currently, SDC explores options for components; among them possible contributions to the social business models of the Syngenta Foundation for Sustainable Agriculture (SFSA) on crop insurance and the Palli Karma-Sahayak Foundation (PKSF) on livestock insurance. These are both tested models and currently in inception respectively on-going with a modest outreach. The SDC contribution would support the insurance product development, diversification and scale-up of affordable solutions to the poor. As premiums are not subsidised, both social business models are scalable. Both models will lead – due to the combination of insurance products with financial literacy, agricultural extension and disaster risk reduction measures - to behavioural changes with farmers investing into higher yielding crops and livestock. The Programme will work through a Private-Public Development Partnership approach in order to achieve systemic changes towards inclusive insurance markets with sustainable benefits for the farmers. Aggregators, such as seed suppliers, buyers, contractors and micro-finance institutions will be the main policy holders and pay the premium to commercial local insurance companies. The latter will be offered the opportunity for reinsurance by the global reinsurance company SwissRe. The combination of latest remote sensing and mobile payment technologies, with the embedding of the insurance products into already existing business relations between poor farmers and input suppliers, buyers or lenders, has the potential to lead to affordable insurance cover for large numbers of poor farmers. The Programmes’ capacity building component will contribute to an enabling environment for inclusive insurance market development; particularly by providing training and advice on global best practices to the Bangladeshi micro-finance and insurance regulators but also to private sector insurance stakeholders. The Programme would consist of 3 phases with a budget of approx. CHF 29 million. As the Programme can in its first phase build on experiences and institutional set-ups of SFSA and PKSF, and capitalises on SDC’s institutional partnership with SwissRe, a fast delivery of outreach and results is expected. These could either be deepened in a second phase, or other inclusive insurance components added. Depending on the results of the programme components, the improved capacity of the regulators and the interest of the Government, the Programme may contribute in its third and last phase to the development of an inclusive national agriculture and/or disaster insurance system which would benefit several million farmers. The results of the Programme will contribute to the priority themes “Employment and Economic Development” and also “Climate Change & Environment” of the Federal Dispatch 2017-20 and generate learning for SDC on Private-Public Development Partnerships in practice. |
