Community Based Insurance (mutuals) for Livestock


Community Based Insurance videos


What is Community Insurance (Mutuals) ?

Community Insurance is a mechanism of mitigating individual risk through collective contribution to a corpus, with an assumption that any of member can have loss and it can not be predetermined.This system has both social and economical benefits. As the social component, it establishes a participatory and helping environment to contribute in adverse situation/loss to a neighbouring family Economically, this system contributes in terms of monetary benefits against risk and save the families from the economical losses.

Why this innovation required ?

Livestock insurance is one of the risk management options for the poor, however, problems for livestock insurance exists both at demand as well as supply side, While low premium size, remoteness of the villages and difficulties in verifying the claims are some of the difficulties that discourage insurance providers to reach out the rural households, at the same time, complex registration process, complicated and long formats, low awareness of livestock insurance products, and high cost on receiving claims dissuade the rural households opt for the livestock insurance. Major problems of present livestock insurance system shows following issues both at demand and supply end.

Demand side Perspectives -

  • Complicated formalities of insurance.
  • High indirect cost of claim settlement.
  • Low access to Insurance centers.
  • Due to illiteracy & male migration/wage engagement, claim process is delayed and cases get rejected.

Existing status

  • Livestock insurance coverage is less than 8%.
  • Small ruminant like Goat Insurance coverage almost negligible.
  • Problems lies on the both Supply (Insurance company) and Demand (Goat Farmer side).

Supply side Perspectives

  • Genuine verification of mortality/Earlier fraudulent cases have set up a wrong precedence.
  • Adherence to basic norms like vaccination and improved management (High risk inbuilt).
  • Remoteness of Goat farmers.
  • Very small premium.
  • Low awareness about Insurance claim process (High investment required).
  • Low access to basic health care.

Solution innovated at The Goat Trust

On the line of SHG -bank linkage concept, a cluster based community Insurance group as peer pressure and basic health care services ensured and same collective platform can be used to link with mainstream insurance company to create win win situation for both. Sensitisation & capacity building of Insurance company and goat farmers is prerequisite.

The Goat Trust and its partners have currently offering a community insurance to those households engaged in goat rearing and goat farming in poverty pockets and semi-arid regions of Madhya Pradesh and Uttar Pradesh, Rajasthan & Jharkhand. The goal of this community insurance initiative is mitigate goat loss risk through integration of goat farmers, building institutions of goat farmers (group and larger federation), and making provisions of financial services (insurance).

Community Insurance Product:

Premium: The premium is fixed based on live body weight and pricing of goats. 10% of sum assured is taken as premium and the product covers a maximum of 50% of market value. As for example, for average price of a goat at Rs 3,000 in the area, the insurance product covers the maximum of Rs 1,500, and thus a premium of Rs. 150 is deposited by a goat farmer in the fund. Normally, the maximum insurance coverage for a goat that is:

0-3 months : not applicable
0-6 months: Rs 500
7-10 months: Rs 1000
First time pregnant goat: Rs 1500
Adult female goat: Rs 2,000
Adult male goat: Rs 4,000

Only healthy and active goats are included in the insurance programme. The health status of goats are estimated based on age and weight of the goat. As for example, for any goat between 3-6 months, the minimum weight should be 10 kg. Likewise, for a goat between 7-10 months, the minimum weight should be 14 kg and for pregnant or grown-up goats, the minimum weight should be 20 kg. Once the premium is paid, the insurance coverage will be active after 15 days.

Present experiences: The Goat Trust and its 10 partners have launched this program after rigorous training of community, community leaders and Livestock Nurses conducted from December 2011 to March 2012. As of July 2013, 1103 goats have been covered under the community insurance. The average premium amount varies from Rs 126 to Rs 161, and premium of Rs 160,137 has been collected and Rs 73,300 has been claimed.

Similar product had been tested in Rajasthan and Jharkahnd on wider scale now with over 5000 goats.

Community Insurance experiences as Dec, 2015

State Total Number of Goat covered Total premium collected(Amount in Rs.) Total claim settled(Number) Total claim settled(Amount in Rs.)
U.P 5037 831105 290 43500
Rajasthan 2716 843990 77 201700
Jharkhand 184 30555 10 15000
Presentation on Community Based Insurance
Power point presentation on Community Based Insurance

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