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Study Overview

Bundling weather index-based insurance with loans: an evaluation of impact on insurance take-up and farmers’ well being
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Initial Registration Date:
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Farming households in the central Senegalese regions, while representing the main contributors to the production of the principal cash crop (groundnut) are highly exposed to the impacts of drought, rainfall deficits and variability. One mechanism to address rainfall-related risks that has spread in many developing countries since the beginning of the century is weather index-based insurance (WII). In Senegal, insurance is proposed to farmers in form of whether a mandatory or a voluntary product bundled with credit and other agricultural services. The national insurance company is arguing for mandatory insurance at national scale, but other stakeholders have expressed doubts on the benefits and costs compared to voluntary bundling, which would leave more choice to the client but require more educational and awareness raising efforts. Using a double difference with matching method, we target the knowledge gap concerning the capacity of aggregators to increase take-up of agricultural index insurance in Senegal, the effects of insurance pay-outs after, as well as in the absence of a shock, and the possibility for bundling to enable farmers to increase their level of investment .
Agriculture and Rural Development
Social Protection
Additional Keywords:
Index-based crop insurance; credit; insurance take-up; risk management; matching; double difference; Senegal
Secondary ID Number(s):
TW13II1026 (ID number assigned by 3ie and reconducted by the University Gaston Berger)

Principal Investigator(s)

Name of First PI:
Mame Mor Anta Syll
University Gaston Berger
Name of Second PI:
Samba Mbaye
University Gaston Berger

Study Sponsor

International Initiative for Impact Evaluation
Study Sponsor Location:
Funding Proposal:

Research Partner

Name of Partner Institution:
Initiative Prospecive Agricole et Rural (IPAR)
Type of Organization:
Research institute/University

Intervention Overview

The evaluation is proposed for the provision of weather index insurance bundled with agricultural loans in Senegal as part of the activities of the national agricultural insurance company (CNAAS). At the approach of the rainy season of each year, voluntary or mandatory insurance is proposed to farmers depending on the governance of their affiliated organisation. For this study, the two following farmers’ organization are considered: 1) The COOPEC/RESOPP microfinance institution will offer voluntary insurance bundled with agricultural loans. Members of COOPEC/RESOPP have access to WII through the OSIRIS project whose purpose is to improve the social and economic protection of rural vulnerable populations. COOPEC/RESOPP has guaranteed the continuity of WII provision beyond OSIRIS through a memorandum of understanding with CNAAS. 2) The farmers’ organisation CCPA, a second aggregator that the insurer suggested to work with for an extension of the study population and increased external validity, will offer mandatory insurance bundled with loans. CCPA members were among the first beneficiaries of agricultural insurance pilots in Senegal through the GIIF Assurance Recolte Sahel .
Theory of Change:
Objective: Contribute to well-being, including reducing chronic poverty and vulnerability, in rural areas by helping farmers to better manage climatic risks, strengthening their resilience to rainfall-related shocks and stresses and incentivising agricultural investments. Inputs: Designing, supplying (CNAAS/PG) and selling (COOPEC-RESOPP and CCPA) WII to producers who apply for credit through the networks in selected locations. This requires the purchase and installation of rain gauges, training of financial service officers and the setup of product provision mechanisms. Outputs: At the end of the intervention, farmers will have access to WII through COOPEC-RESOPP and CCPA. Established products and supply channels should guarantee ongoing provision of WII. Outcomes: In the short term, there will be a high effective take-up of WII. To poorer farmers, insurance will provide a possibility to reduce collateral requirements and enhance access to credit by using insurance as a partial substitute to collateral. In the longer term, insurance will (1) compensate policy-holders for rainfall-related harvest losses covered by the insurance contract and (2) stimulate agricultural and off-farm investments, resulting in increased productivity and higher levels of resilience, even in the absence of a shock. Impacts: The expected impact of the intervention is an increase in overall well-being of farmers and their households, to which WII contributes through preventing debt from rainfall-deficit-related credit default and increasing incomes – on-farm via the outlined productivity channels and off-farm via re-investments in additional income-generating activities. Impacts will depend on reliable and sustainable insurance mechanisms, farmers’ use of pay-outs in a way that increases their income and the realisation of economic co-benefits from insurance coverage even in the absence of a shock.
Multiple Treatment Arms Evaluated?

Implementing Agency

Name of Organization:
Comagnie Naionale d'Assurance Agricole du Sénégal / National Agricultural Insurance Company (CNAAS)
Type of Organization:
Public-Private partnership

Program Funder

Name of Organization:
Government of Senegal
Type of Organization:
Public-Private partnership

Intervention Timing

Intervention or Program Started at time of Registration?
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End Date:
Evaluation Method

Evaluation Method Overview

Primary (or First) Evaluation Method:
Other (not Listed) Method:
Additional Evaluation Method (If Any):
Difference in difference/fixed effects
Other (not Listed) Method:

Method Details

Details of Evaluation Approach:
To measure the causal change in the key outcomes, we will use difference-in-difference with matching. Difference-in-difference methods are appropriate to exploit the time or cohort dimension, and allow accounting for unobservable but fixed characteristics. However, without matching, we would systematically confront imbalances, model dependence, researchers’ discretion issues, and eventually bias in the difference-in-difference design. Matching allows us to eliminate these issues. By matching on control variables, we can estimate the sample average treatment effect. Clustering at the village level will enable us to avoid spillover and contagion effects over the control groups. For the Hawthorne effect, it is not too relevant since we would expect that the risk to lose access to credit could push farmers towards purchasing the insurance product. The John Henry effect is eliminated by the fact that (1) the control groups will be selected from people who can have access to the insurance product and (2) that for the comparison of mandatory bundling versus voluntary bundling, farmers cannot shift membership from an organisation to the other.
Outcomes (Endpoints):
Two primary outcome variables or interest are considered for this evaluation: 1) farmer’s objective well-being from WII measured by the quintiles of income from the insured crops 2) index insurance take-up and proportion of farmers that purchase the WII within a cooperative accross time Next to this two primary outcomes that we considered in the power and sample size calculations, we also identified the following secondary outcomes: (1) the renewal of the insurance take-up, (2) the renewal of the agricultural credit demand, (3) Awareness of the insurance product, (4) Perception of quality and adequacy of the insurance product offered (5) Household consumption (6) Alternative processes or strategies for risk mitigation (7) Women's mental health
Unit of Analysis:
1: Voluntary incentivised bundling of insurance and credit increases its informed take-up. 2:Informed and desired take-up of WII (namely when it is voluntary) stimulates adoption of higher level of investments, technology adoption and, improve in agricultural practice in the long term through applications for higher amount of credit. 3:Mandatory bundling of index-insurance and credit lead to the increase of the phenomenon of uninformed and unwanted take-up. 4:Uninformed and unwanted take-up because of mandatory insurance does not increase the level of agricultural investment, stimulate the technology adoption or improve the agricultural practices performed by the producers. 5: High-risk high return investment options, if adopted, by the farmers will lead to the increase of their income and the improvement of their living conditions. 6: High-risk high return investment options, if adopted, by the farmers will lead to the increase of their income and the improvement of their living conditions. 7: Indemnifications received after a harvest lost enables to avoid debt, payment default and indirect losses in the long run.
Unit of Intervention or Assignment:
Number of Clusters in Sample:
21 clusters for each of the treatment group and 65 clusters for the control group.
Number of Individuals in Sample:
963 (9 observations per clusters)
Size of Treatment, Control, or Comparison Subsamples:
189 individuals in each treament group (for two groups of treatment) & 585 individuals in the control group

Outcomes Data

The expected sources of quantitative data include: - Three rounds of survey, administered during the first year (baseline), third year with some flexibility to capture pay-out years (midline) and fifth year (endline). - Administrative data from the insurer CNAAS and its broker PG, the microfinance institution and farmers’ organisation COOPEC/RESOPP, RESOPP and CCPA
Data Already Collected?
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Treatment Assignment Data

Participation or Assignment Information:
Data Obtained by the Study Researchers?
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Data Analysis

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Study Materials

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Registration Category

Registration Category:
Prospective, Category 1: Data for measuring impacts have not been collected

Completion Overview

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Preliminary Report:
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Data Availability

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Study Stopped