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Bundling to Make Agriculture Insurance Work

Bundling agriculture insurance with other services like credit and better farm inputs is fast emerging as a possible solution to help agriculture insurance to achieve better social outcomes, make insurance more tangible and enable schemes to scale faster.

There is evidence that states that access to agricultural insurance leads to significantly larger agricultural investment and riskier, yet more rewarding, production choices in agriculture. However, insurance as a standalone product may not be sufficient to overcome the binding constraints of farmers. Hence, bundling provides more value for all the players in the value chain.

This paper considers the entire value chain for smallholder farming in the market of focus in order to better understand how value alignment can be achieved. It aims to understand not only how bundling should make sustainable business sense for each stakeholder but also how to offer real client value to smallholder farmers, while being accessible and affordable. The paper provides details on the generic value chain, which forms the basis for the specific value chain discussed later in the cases. It then draws key insights from four cases in India, Kenya and Zambia.