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Seeing what works, and doing it better

Our insurance team is increasingly stepping outside traditional SFSA focus countries. We are now looking for the best smallholder solutions in Cambodia. Crucial support comes from Switzerland.    

Our insurance team began working in South-East Asia in 2014, and has developed several products suitable for more than one setting. For example, similarities in climate, risks and smallholder practices often make products from elsewhere useful for Cambodia as well. We and a number of international partners are keen to replicate our insurance solutions there. In August 2017, we therefore began ‘pre-feasibility’ activities. We aimed to understand the country’s agricultural insurance set-up, and determine the potential to develop and distribute products there. Our investigation also identified relevant local partners. In December 2017, SCBF agreed to support further activities with two grants. The first will enable a feasibility study and a two-season dry run with existing products tailored to local farmers, and corresponding distribution activities. The second grant covers a financial education program similar to that in Myanmar.

The innovative model

Combines insurance with credit and capacity building; brings in insurance tools at the micro and meso levels; and addresses both portfolio and client level risks.

Stressing that farmers are smart in how they deal with risks and financial resources in their specific context. As such, their diversified livelihoods make sense. Getting out of poverty, however, means investing, making choices and thereby concentrating on activities which generate higher incomes. Concentration of activities however, also means concentration of risk. It is here that insurance can play a transformative role. Olga Speckhardt names it as theory of change. Taking away, or minimising risk, can encourage farmers to invest and increase their income, and can also encourage financial institutions to lend and partner with aggregation ventures where risks are concentrated (for example, due to a focus on a single or limited number of products and sectors). Different solutions are combined to address risks efficiently at these levels: offering good insurance products at the micro level that adequately and quickly handle pay-outs, while portfolios with concentrated risks are protected against major disasters at the meso level.