This article describes a novel index-based livestock insurance (IBLI) product piloted among pastoralists in Northern Kenya, where insurance markets are effectively absent and uninsured risk exposure is a main cause of poverty. We describe the methodology used to design the contract and its underlying index of predicted area-average livestock mortality, established statistically using longitudinal observations of household-level herd mortality fit to remotely sensed vegetation data.

Climate related shocks are among the leading cause of

production and efficiency losses in smallholder crop and

livestock production in rural Africa. Consequently, the

identification of tools to help manage the risks associated

with climactic extremities is increasingly considered to be

among the key pillars of any agenda to enhance agricultural

growth and welfare in rural Africa. This paper describes the

application of a promising innovation in insurance design –

index-based insurance – that seeks to bring the benefits of