Assessing How to Enhance Uptake of Index-based Insurance Among Smallholder Farmers in Embu County

Abstract

Kenyan agriculture is susceptible to climatic shocks, posing challenges for smallholder farmers in predicting the productivity and profitability of rain-fed farming systems. Despite the implementation of various adaptation strategies, such as improved seeds, irrigation, soil conservation, and risk transfer, additional measures are necessary to protect farmers against losses from extreme weather events. Index-Based Insurance (IBI) has been introduced to aid farmers in recovering from shocks and investing in their farms without fear of total loss. However, the low adoption of IBI in Embu County necessitates an exploration of the factors affecting its adoption and strategies to increase its demand and accessibility. This study utilized a sample of 111 households out of 161,000 in the county, considering various factors, including demographic characteristics, farm and land size, crop yields, income, funding sources, climate change impacts, IBI adoption, and agro-weather information. The data collection tool was validated using the Item-Level Content Validity Index (I-CVI) and Scale-Level Content Validity Index (S-CVI), with reliability determined using the Cronbach alpha approach. Descriptive statistics were employed to analyze the frequency of responses to the critical study parameters using SPSS statistical analysis software Version 22. The analysis revealed limited agricultural insurance options, with only one choice for maize crop protection against drought risk. Farmers expressed dissatisfaction with this insurance product due to its limited crop coverage and perceived insufficient compensation. The study recommends enhancing the quality and suitability of IBI products, including expanding coverage to more crops for comprehensive protection of smallholder farmers. Increased public investment in raising awareness about IBI policies is also recommended, alongside government-led initiatives to educate farmers about insurance and facilitate data sharing with insurance companies to improve product quality. The study further suggests that farmers should actively participate in enhancing IBI quality by maintaining detailed records of their farming activities and yields, which could inform and validate the design of IBI. Other considerations for enhancing adoption include more significant farmer consultation in the product design and ensuring value for money to increase farmer satisfaction with insurance.