Bangladesh Microinsurance Market Development Project (BMMDP) (Surokkha)

The project supports Farming Enterprises (Micro and Small) to improve resilience through using climate-sensitive microinsurance products and services, contributing to food security and inclusive economic growth of Bangladesh.
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Bogura, Bangladesh
24.848078
89.3729633
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Dinajpur, Bangladesh
25.6221009
88.6437649
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Rangpur, Bangladesh
25.7438916
89.275227
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Rajshahi, Bangladesh
24.3745146
88.60416599999999
Project duration
2017 - 2027
Financed by
  • Swiss Agency for Development and Cooperation SDC

(represented by the Embassy of Switzerland in Bangladesh)

Agriculture plays a pivotal role in Bangladesh's economy, but it is threatened by aggravating natural hazards induced by climate change (such as floods, cyclones, and etc.) that lead to significant losses in agricultural production. The consequences of this extend to the livelihoods of Micro, Small & Medium Enterprises (MSMEs) and smallholder farmers, which leads to further implications in sustaining income generation, food security, and poverty reduction.

Bangladesh is the seventh most climate change-vulnerable country in the world and ranks fifth in terms of economic losses due to climate change, which in the past 20 years (2000-2019) totalled USD 3.72 billion. Around 56% of Bangladesh’s population (90 million) live in “high climate exposure areas,” with 53 million subjected to “very high” exposure.

One of the key tools that can support climate-resilient agriculture is insurance – as a mechanism to transfer and mitigate the risks associated with climate change. Globally microinsurance has proved to be an effective instrument for managing climate-induced vulnerability of the farmers and, in turn, for the countries.

The project

Phase 1

Recognizing the potential of microinsurance to mitigate these challenges, the Swiss Agency for Development and Cooperation (SDC) initiated the Bangladesh Microinsurance Market Development Project (BMMDP) in 2017 and continued till 2023.

In Phase-1, BMMDP envisioned the availability and offering of appropriate products for index-based crop insurance by primary insurance companies, the identification of a commercially viable livestock insurance model with risk mitigation and risk transfer mechanisms for microfinance beneficiaries, and the development of sector capacity in agricultural microinsurance. Phase-1 of the project successfully introduced commercially viable insurance products to support farmers, surpassing all possible targets.

Phase 2 (2023 - 2027)

BMMDP Phase-2 (branded as Surokkha) will specifically target crops, fisheries, and livestock in the agriculture sector. The project will design and implement interventions in the below mentioned intervention areas:

  • Intervention Area 1: Facilitate a conducive policy environment for climate-sensitive microinsurance.
  • Intervention Area 2: Stimulate climate-sensitive, client-centric, and commercially viable products/services and improve the support service market for microinsurance.
  • Intervention Area 3: Increase mass awareness and understanding relevant stake holders and among low-income households to encourage demand for climate-resilient microinsurance products.

To achieve the project’s goals and battle the challenges, BMMDP Phase-2 will adopt a more comprehensive approach, prioritizing enhancements in policy, product, and support service market development and the generation of widespread awareness. The second phase will employ a combination of innovative tools to attract partners and co-investors. By doing so, it aims to catalyse the growth of the microinsurance sector, thereby enhancing resilience to climatic shocks in the agriculture sector.

Tools of Phase 2

Technical Assistance (TA): BMMDP will provide necessary technical support to (a) create a conducive regulatory environment for the Microinsurance sector, (b) facilitate a climate-sensitive and client-centric microinsurance support service market, and (c) Facilitate behaviour change among the target audience about microinsurance service.

Innovation Fund: The Innovation Fund will be a co-financing modality to trigger competition among private sector partners. Experience from Phase-1 indicates that there is sufficient interest in the market for this instrument. This innovation fund will require the grantees to share a certain part of the intervention/project cost. Usually, the grantees share 50% of the intervention/project cost of which at least 50% (25% of total project cost) is cash contribution.

De-risking Fund (or Climate Risk-Resilience Fund CRRF): The CRRF provision will be tested to encourage the country’s main re-insurer (SBC) to provide reinsurance support to innovative climate-resilient products/services and sub-sectors where historical loss data is not available. Partial guarantee funds where the reinsurer takes a significant amount of the risk, but has some coverage from donor funds, can help introduce reinsurers to new markets/sectors. Expert legal assistance will be needed to structure this fund with the right parameters; SDC will transfer the money earmarked for this fund to the MA to manage and administer for the duration of the programme. Any unused fund remaining towards the end of the programme can be used for the other intervention activities.  BMMDP Phase-2 will monitor usage and impact of this fund on a regular basis.

 

Results

Phase 1 (2017 - 2023)

  • More than 1.5 million farmers reached through BMMDP project activities.
  • Over 920,000 farmers across the country purchased crop and livestock insurance policies against a target of 347,000, of which 62% were female farmers.
  • The financing volume triggered due to the project was over CHF 169 million against a target of CHF 34 million.
  • Approximately 600,000 farmers benefitted with increased resilience through increased income.
  • Over 550,000 new livestock brought bought under insurance.
  • Over 608,000 farmers applied climate-resilient farm management practices.
  • Approximately 59,000 acres of land area covered under crop insurance products.
  • Total premium paid by farmers surpassed CHF 2.3 million.
  • Around 155,000 farmers and micro and small enterprises were affected by different hazards and economic shocks and thereby received insurance payout of over CHF 0.8 million.
  • 92% of the project beneficiary farmers were satisfied with the policies and services offered.
  • Focused on Customer-Centric Product Innovation: Introduced weather & and area-yield index-based crop insurance and cattle health insurance while bundling insurance with agri-input services and exploring bancassurance agricultural product innovation to reduce risks and enhance accessibility for farmers.

However, the success also outlined that a broader approach was needed to address systemic constraints within the microinsurance sector to achieve all project goals properly. Thus, to meet this need, BMMDP Phase-2 was developed.

 

Expected Results Phase 2 (2023 - 2027)

Based on the promising achievements in Phase-1, BMMDP Phase-2 targets include:

  • At least 200,000 farmers, micro and small enterprises will use climate-sensitive microinsurance services, increase income, and have better resilience against climate change-related losses.
  • At least 3 (three) microinsurance-relevant policies will be developed and approved for implementation.
  • At least 10 (ten) new climate-sensitive microinsurance products in crop, livestock, and fisheries will be developed, and ten private and public support service actors’ capacity will be improved.
  • At least 1.2 million people in the farming sector will be sensitized to climate-resilient microinsurance through specific campaigns.

 

News

Bangladesh
Entrepreneurial ecosystems, Sustainable agriculture
13.10.2023
International Disaster Risk Reduction Day: Building a resilient future through ensuring equality
Promoting resilience and equality on International Disaster Risk Reduction Day through BMMDP and M4C project, funded by the Embassy of Switzerland and implemented by Swisscontact Bangladesh.
Bangladesh
Entrepreneurial ecosystems, Sustainable agriculture
17.05.2023
Dealing with climate change and strengthening resilience
Bangladesh is one of the countries most affected by climate change; economic damage to the agricultural sector is many times greater than the effects of Covid-19. Swisscontact is working with a multitude of private sector partners to provide adequate insurance protection in the agricultural sector.
Bangladesh
18.01.2023
Bangladesh's first-ever muzzle-based cattle identification system for insurance 
A nose print is a unique pattern to identify cattle. The project Surokkha brings in a revolutionary technology to integrate cattle muzzle prints with the identification of insurance eligibility, introducing an efficient cattle insurance management system – the first ever in Bangladesh.