Some reflections on smallholder agriculture, microinsurance, and rural development

01.12.2014
If microinsurance is considered a frontier business, then agricultural microinsurance is at the extreme frontier of this market. Two papers were recently published and take a deeper look at this sector, broadening the perspective both on the historical context, including agricultural insurance in advanced economies, as well as on typical constraints impacting smallholders’ investment decisions and challenges faced during implementation. This article reviews and synthesizes these two papers, highlighting and expanding on some of the key issues. It concludes that agricultural microinsurance projects should put the smallholder at the centre, starting from a thorough analysis of the constraints landscape and clearly improving customer value. Further, improved agricultural microinsurance products should be embedded into a broader risk management and service package in order to increase value and demand. Before advocating more public subsidies for premiums, these should be subject to a cost–benefit analysis. Improved monitoring, evaluation, and documentation of current projects should inform future activities in this important field.