OSU-ACET Index Insurance Program

Principal Investigator: 

Mario Miranda and Abdoul Sam


To support the use of agricultural credit using index insurance The Ohio State University (OSU) and the African Center for Economic Transformation (ACET), in collaboration with the University of Ghana, will undertake a program of research, outreach, and education.

OSU/ACET will work closely the Ghana Agricultural Insurance Programme (GAIP), an organization of 19 Ghanaian insurance companies whose primary mission is to assist members in creating, designing, rating and implementing crop insurance products in Ghana.

GAIP’s insurance products already include products based on rainfall levels, satellite vegetation indices, and area yields. In fact, GAIP, in collaboration with the Ghana National Insurance Commission, conducted a detailed agricultural insurance feasibility study in the first half of 2010. The study found “a major need in Ghana to improve farmers’ access to rural finance if they are to invest in improved seed and fertilizer technology and to thereby increase their production and yields and farm incomes.

The study further proposed introducing “crop insurance as part of a coupled program with production credit, seeds and fertilizers and preferably with output marketing assistance”. The coupling of agricultural insurance with credit through rural banks, micro-finance institutions, input suppliers, exporters, processors, and cooperatives has thus become the focus of current and planned GAIP activities.

The OSU/ACET research program, begun in August 2013, is scheduled to run for three years. During this period, OSU/ACET will conduct a randomized control trial, implemented in three distinct stages, starting in the summer of 2014. To date preliminary work has been completed and plans are in motion to launch the baseline survey from May to August 2014. Results should be available in early 2015 before the launch of the second follow up survey that will take place a year after the baseline. A second and final follow up survey will take place from May to August 2016.

Recent Developments:

Lessons learned from our study will inform policymakers throughout the developing world about the potential for index insurance to promote economic transformation of the agricultural sector. The project will work closely with GAIP and the University of Ghana to implement an aggressive outreach and education program to raise public awareness about the use of contingent-credit index insurance. Through these efforts, the project expects to have a significant impact on building a sustainable agricultural insurance system and enhancing the performance of the agricultural credit system to the benefit of both farmer and lender. The outreach program will be geared to smallholders, producer groups, implement dealers, input suppliers, cooperatives, exporters, processors, government officials, insurance companies, commercial banks, microfinance institutions, NGOs and donor organizations. The program will cover best financial risk management practices employing index insurance.

Some potential impacts of the OSU/ACET program include: 

  • Increased adoption of index insurance by financial institutions and others,
  • Expansion of the insurance schemes to stakeholders involved in non-traditional agricultural production,
  • Adoption of contingent credit index insurance schemes in other regions of Ghana,
  • Expansion of lending to smallholder farmers due to lower default risk for financial institutions,
  • Reduced interest rates for agricultural loans due to lower default risk and increased lender competition, and
  • Increased adoption of improved production technologies brought about by better access to agricultural loans and crop insurance.