Satellite maps of African weather promise a microinsurance breakthrough

Financial Inclusion

Satellite maps of African weather promise a microinsurance breakthrough

Satellites orbiting the Earth may turn out to be much cheaper than either insurance adjusters or local weather stations. Photo: <a href="http://www.flickr.com/photos/nasaearthobservatory/7420745884/in/photostream/">NASA Earth Observatory</a>
Satellites orbiting the Earth may turn out to be much cheaper than either insurance adjusters or local weather stations. Photo: NASA Earth Observatory

High above Africa, a fleet of satellites are now staring like hawks at the continent's weather patterns. Their goal: cheap farm insurance.

Agricultural insurers have long depended on knowing weather and climate patterns, either to predict future claims or (in the case of index-based insurance) to determine when to make a payout. This has typically required expensive local weather stations.

But for three years, a Dutch tech firm called EARS Earth Environment Monitoring has been working on an alternative: satellite-based data collection. As insurance-news site Artemis.bm reported this month, the company has now crunched 30 years of historical data to estimate what "normal" weather in Africa looks like from above.

That's a crucial development. Knowing what's normal, Artemis reported, will allow the firm to know what bad weather looks like—and when farms in a given area will need a prompt insurance payout.

EARS now has "potential scale and resources to insure several hundred thousands of farmers," Artemis wrote Sept. 11. And the low cost of satellite data could allow premiums to be extremely cheap: "The yearly cost of data collection, index development and index monitoring is below 0.5 euro per farmer."

Intriguingly, Artemis also suggests that the data could have applications for reinsurance—the "wholesale" policies that retail insurance companies take out to insure themselves.

For EARS, it sounds like the next step will be finding partners who can bring this dirt-cheap data into the insurance market.

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