Oromia Insurance Company (OIC) has introduced a new scheme to pay compensation for livestock before the drought season, Addis Fortune reported.

Formerly, OIC pays compensation after the drought season.

OIC applies index-based-livestock-insurance (IBLI). Its insurance coverage is only limited to Borena Zone, Oromia Region and targets two drought seasons of the area named Hageya and Hudulissa.

Owners of livestock insured under the IBLI will be acquiring money for the sustenance of their animals. The new scheme is introduced this month in response to demands from policy holders and calculates the cost resources needed to keep the animals alive during the anticipated drought.

In spite of lower premiums compared to the previous scheme, OIC is securing profits, said Daniel Negassa, Head of OIC’s Micro-insurance Department.

The premium for camels is 5,000 Birr; 3,000 Birr for cows and oxen and 500 Birr for sheep and goats. The respective figures under the old system were 10,000 Birr, 5000 Birr and 800 Birr, based on the average market value of the livestock.

OIC launched the insurance coverage in August 2012 in association with Cornell University and International Livestock Research Institute (ILRI). Currently, there are 2,612 households covered by the scheme.

Source: Addis Fortune