Innovative solutions: insurance against human-wildlife conflict?

Fri, 2007-09-14 17:08 by hcroze · Forum/category:

Over the past few years, ATE has been looking for new ways to engender good will towards wildlife in the greater Amboseli ecosystem: the key to the future of the elephants is a positive attitude among the Maasai who live in the park's dispersal areas (see Outreach). Last year, during internal discussions on ways to mitigate human-elephant conflict (HEC) towards better human-elephant co-existence (also HEC) we wondered if it was not possible to conceive of an insurance scheme that would essentially insure occupiers of the ecosystem against the risk of depredation by wildlife.

I wrote in a note in April 2006 to colleagues in a conversation about lion consolation payments:

… could we not revisit the idea of Wildlife Insurance, for both human injury and death as well as damage to property? I'm firmly convinced that if we asked some insurance companies to do the actuary sums, they would find it is worth their while. After all, human-wildlife encounters (apart from crop raiding) are relatively low-frequency, localised events, certainly a couple of orders of magnitude below motor car incidents. I'd guess we could find some donor money to help with the premiums in the first instance, with a view to moving through a phase where each family head would also contribute until they would take over the scheme completely. Tom Hill's self-regulation* could be brought into the picture by losing benefits (like a no-claims bonus) if animals are speared in anything but self-defence.

* referring to non-payment of benefits if the rules of the consolation scheme are not followed, see Hill, T. and Bonham, R. (2005). Living on Borrowed Time. Swara 27(2).

Keith Lindsay brought us back to the idea recently:

…please find attached a little opinion-info piece by Jeffrey Sachs (see attached pdf) about environmental hazard insurance. It looks as if he and his group are looking at broader ecological hazards, esp. drought in relation to climate change (Sachs mentions a project in western Kenya, so there is a precedent in the country), but a more focussed approach on ele conflict/coexistence might be easier to achieve…. I'm thinking that this could form part of the KWS ele strategy, broadening the approach out into a human-ele landscape issue, rather than a lot of piecemeal strategies to deal with separate aspects of coexistence…. There has got to be some thinking done about ways to handle compensation claims. The insurance angle sounds interesting, esp. since Sachs & co have set some precedents. But also because insurance transfers responsibility to the farmer, for taking proper precautions, and takes govt/ KWS out of the middle man role. And it's a market solution…

So, below we will add some comments on this notion and hope that our corresponding community will come up with more ideas on how to implement.

AttachmentSize
Sachs_SciAm_8-07.pdf87.83 KB

Two approaches

Fri, 2007-09-14 05:49 by hcroze

After a recent chat with an underwriter from AON Minet, I understand that there may be another way of tackling the issue.

We had been thinking about a scheme to insure each rural resident in the Amboseli ecosystem so that s/he would covered against personal injury from wildlife rather like one may have medical coverage or insurance for a motor car.

The other way, if I understand his remarks on 'Public Liability' correctly, would be for a putative 'owner' of the wildlife (KWS, or the Amboseli Trust for Elephants, or the Oloitokitok District Commissioner's office...) to take out an umbrella policy to insure third parties in the ecosystem for damage from 'the policy holder's wildlife'. I have no views or experience to comment on which of these options would be best in terms of management, verification; the underwriter is currently examining the options.

_________
HC

On Mon, 17 Sep 2007 09:07 Francis Maina, AON, wrote:

Mon, 2007-09-17 06:56 by hcroze

I have read through the correspondences that you have had with Nderitu.

Personally I feel the route of insuring third party properties may not be the best because of a number of challenges,

  • Cost - Insuring lives and properties of third parties will be very expensive
  • Insurable Interest - This is one of the principles of insurance that prohibits a person from insuring property that does not belong to him.
  • Insured Persons - If you insure people within the ecosystem, what will happen in case of an accident to a visitor.
  • Market - Locally, to obtain this type of Insurance (Insuring Properties of third parties) may not be readily available.
  • The suggested property and injury insurance to the community within the ecosystem will not provide cover for legal liability.
  • Operationalisation - Managing this kind of scheme in terms of underwriting and dealing with claims may be an uphill task.

Reasons wherefore I propose a public liability Insurance policy (Extended to cover liabilities arising from wild animals) with sufficient Limits to cover Liabilities in terms of Injuries and Property Damage to third parties.

Advantages

  • It is easy to operate
  • Costs - Manageable compared to the other proposal.
  • Market - Locally available

NB: The property covers Amboseli Trust for Elephants against liabilities from third parties and negligence on the part of trust will have to be proved in a court of law.

Ownership, responsibility and liability

Mon, 2007-09-17 07:28 by hcroze

There is still the issue of implied ownership and therefore responsibility for liability. ATE cannot possibly assume the mantle for all the wildlife of Oloitoitokitok District. There might be, I guess, a case for ATE taking out a special policy just for elephants, just like there might be for the Amboseli Lion Consolation Fund taking out a special policy just for predators. On the other hand, perhaps KWS should Think Big and consider a blanket policy for all 'its' wildlife in the ecosystem.

But, even if ATE were to take out a public liability policy, the purpose would not be to protect itself -- ATE doesn't 'own' the elephants; the eles are not its legal responsibility vis a vis third parties -- but rather to compensate and console the third parties should an incident occur. Perhaps that distinction -- a moral (or strategic) responsibility versus a legal one -- wouldn't matter to the form and letter of the policy.
_________
HC

KL comments...

Fri, 2007-09-14 06:31 by Keith

... On one hand, I would tend to prefer the personal injury aspect, framing the thing as a relationship between people and insurers, rather than bringing in KWS in the middle as "owners" of the wildlife. (Have you seen Mike N-G's paper in World Economics, an analysis of the Wildlife Policy?) Part of the process should be to get people to take personal responsibility for their livestock and their relationship with wildlife, rather than just reinforcing KWS's top-down ownership position and keeping people separate from wildlife. The example of micro-credit at village levels seems like the model to follow: => micro-insurance? On the other hand, getting the thing off the ground and making it work, with insurance guys (suits, briefcases) going from boma to boma and dickering with [suspicious] Maasai elders, does boggle the mind a bit. KWS would obviously be a lot easier for the office-dwellers to deal with. Maybe getting ATGRA/ ATGSA or group ranches involved? Some thought needed here, clearly.

MNG comments on 14-May-06

Sun, 2006-05-14 06:04 by hcroze

This is a really interesting idea -- KWWG [Kenya Wildlife Working Group] did a big effort with the Insurance industry a year or so ago, I'll look up the stuff -- could be of interest.
Mike Norton-Griffiths

Some numbers

Sat, 2007-09-15 05:51 by hcroze

An insurance underwriter asked us a number of questions to try to get at the likely magnitude of claims for human-wildlife incidents. On 18-May-2006, we sent him the following:

Size of insurable domain: humans

From the 1999 Kenya census, there were ca. 120,000 people in Kajiado South. Is it possible to think of some kind of group coverage for a defined population for specific risks from injury or death from wildlife incidents? See table below for estimates of numbers of incidents.

Size of insurable domain: livestock

From a number of sources, there are probably some 150,000 cattle and perhaps 200,000 shoats (= sheep + goats; in aerial counts we don't distinguish; in any event, they have about the same monetary value).

Number of insurable incidents

For elephants, from data gathered from KWS and Amboseli-Tsavo Game Scouts Association over the past decade (1993-2005, elephant data; 1994-2004, predator data), we can derive the table attached to this comment.

Now these numbers are quite rough to be sure, given the lack of a sampling frame and the heterogeneity of the sources. But they certainly give an ideal of order of magnitude, probably erring on the low side, but not by much. Several points:

  1. Data sources. The data come from Occurrence Book reports from incidental observations, particularly by the 80 Maasai scouts that patrol the ecosystem. There are three main reporting stations from which the data were transcribed (by AERP): Mbirikani, Oloitokitok and the Public Campsite in Amboseli. Going by the place names recorded, I'd hazard a guess to say that the coverage of the reporting probably covers 80-90% of the ca. 7,000km2 range of the Amboseli elephant population (the Kenya part of their range). On the other hand, it covers the areas where elephants at least are most likely to occupy, so, from the elephant point of view, the coverage is quite representative.
  2. The numbers are not very large. There are at least three obvious reasons, in no particular order: (a) It could be that in fact that getting assaulted by wildlife, elephants in particular, is a relatively rare event, compared, for example, to becoming involved in a motor car accident. In that regard, an elephant attack is rather like airplane crash: relatively infrequent and improbable, but spectacular and potentially costly when it occurs. (b) Undercounting or non-reporting, which biases the sampling downwards because of missing or unreported events, in my view is rather unlikely. Even if the scouts do not achieve complete coverage in time and space (despite being obviously dedicated and keen), there is an incentive for victims to make certain somebody knows about the attack. If anything, one might expect over-reporting on the part of victims. (c) Falsified records. As mentioned in (b), both the Scouts and the victims should be motivated to report and perhaps even exaggerate. For KWS officials, however, who are the custodians of the wildlife and in part responsible for reducing human-wildlife conflict, there might be motivation to create an impression for headquarters of 'no worries here' by underreporting incidents. I hasten to say that we see no evidence whatsoever of this mindset in the current and recent senor staff in place.
  3. Local effects. That said, we need to be aware that predator attacks can increase in frequency locally. The Mbirikani Predator Compensation Scheme reports that in 2004, there were a total of 746 predator attacks of stock, some two per day. Now, Mbirikani is some 1,200 km2, about 15% of the ecosystem. If you were to extrapolate that willy-nilly to the ecosystem, you get of the order of 5,000 attacks a year. That's almost certainly a gross exaggeration, since 13 attacks a day would be headline news, every day. You might want to take a figure of a couple of thousand as a worse-case scenario for predators (not for elephants!).
  4. Change over time>. Although the data aren't good enough for a time series analysis, there seems no indication that there has been much change in volume or frequency of events over time. If anything, there is an indication that there was a loading of events in 1999, which was a particularly dry year when we expect conflicts to increase.

Size of likely property claims.

Concerning the property insurance portion (and not, of course, human injury or death), the amounts to be insured would be relatively small, compared, say, to a home theatre system or motor car. The AERP Consolation Scheme is currently leveraging donor money to pay for each verified case of a fatal elephant attack on stock outside of the park KES 15,000 for a cow and KEW 5,000 for a shoat, which we know is well above market rates. We assume that an insurance scheme would reimburse at current market rates.

Potential types of coverage

In 2006, we suggested to the broker that we should separate potential coverage from two kinds of hazard: one is attack by elephants, the other, attack by lions and other predators. Also, each of these would have two policies (or whatever you call them): one for personal injury or death, the other for damage to property, specifically, cattle, sheep or goats. We suggested not to get into insurance for non-living property or crop damage at this stage (although we may discuss later on): the area is supposed to be pastoral, with a rainfall inappropriate for rain-fed agriculture.

Claims verification.

Both the current lion and elephant schemes, and the new ALCF predator proposal on the table have mechanisms for verification upon which an insurer could build. For the elephant compensation/consolation scheme it requires on-site examination by a group of partners: the researchers involved with the particular species, the Game Scouts, KWS and the Group Ranch. Presumably the insurer would want in place its own objective investigation, equivalent to a police report on a motor car accident. There must be provisions for such in general accident policies.

_________
HC

Table of incidents

Sat, 2007-09-15 05:56 by hcroze

 

 

 

 

ELEPHANTS '93-'05

Total

Mean

Range

Max. Year

People Killed

18

1.4

0-6

1999

Injured

18

1.4

0-4

1999

Cattle Killed

32

2.5

0-9

2000

Injured

5

0.4

0-5

1999

Shoats Killed

18

1.4

0-6

2004

Injured

0

0.0

n/a

n/a

 

 

 

 

 

LIONS '94-'04

People Killed

4

0.3

0-2

1999

Injured

9

0.8

0-3

1994/95

Cattle Killed

82

6.8

0-20

1996

Injured

1

0.1

0-1

2002

Shoats Killed

484

40.3

3-94

1998

Injured

6

0.5

0-4

1997

 

 

 

 

 

ALL PREDS '94-'04

People Killed

4

0.3

0-2

1999

Injured

11

0.9

0-3

1994/95

Cattle Killed

106

8.8

3-20

1996

Injured

1

0.1

0-1

1998

Shoats Killed

731

60.9

3-131

1998

Injured

20

1.7

0-14

2004

 

 

 

[Mean is annual; Range is max-min values per category over the whole period; Max.Yr. is the year that had the most events.]

At 12:00 01/05/2006, Laurence Frank wrote:

Mon, 2007-09-17 06:43 by hcroze

To add an additional complication: an insurance program would require at least as much manpower as the Predator Compensation Fund to investigate and verify each claim. Given the high number of claims, both legitimate and otherwise, premiums would have to be quite high to pay both administration and paying out of claims, let alone profit to the insurer.

On 11 May 2006 11:50 HC wrote:

Mon, 2007-09-17 06:46 by hcroze

Laurence's point about manpower cost is probably true, but surely if the effort is the same, it's the same, not additional. The verification of one event could serve both the PCF/Elephant Consolation as well as the insurance investigation. Of course, a Game Scout or a researcher is not quite the paragon of objective verification as the cop on the beat, so, yes, there are investigation issues.
_________
HC

At 07:51 AM 4/29/2006 +0300, Seamus Maclennan wrote:

Mon, 2007-09-17 06:42 by hcroze

I hope I'm not going to come across as overly blunt here, but I think our odds of being able to sell insurance to Maasai are about as good as selling Sand to the Tauregs in the Sahara.

1) carnivore killings are not low-frequency, isolated events. at least certainly not on Mbirikani. They happen at a rate of at least 2 per day, sometimes as many as 6, with the average probably around 3. These are not numbers that insurance people like to see.

2) if I understand insurance correctly, it works on the premise that claims are the exception rather than the rule. If it were a statistical fact that every house in a street in downtown new york were going to be robbedonce a year, would an insurance company still insure them?

3)who would administer the claims? the wealthy directors of an insurance company? why should they make a profit when we can skim that profit and plough it back into conservation?

On 11 May 2006 11:50 HC wrote:

Mon, 2007-09-17 06:48 by hcroze

On the magnitude of potential claims, indeed Hill & Bonham (2005) cited 746 stock killed on Mbirikani in 2004. Still, 2 or 3 a day, whilst impressive, is an order of magnitude less than the 40-odd traffic accidents recorded each day in 1998 (only stats I could find quickly) in Kenya, all of which in theory were insured. Yes, I know, the proportions aren't comparable. So, if you assume events on Mbirikani are 'typical', then carnivore predation still seems to be proportionally smaller than motor car accidents. The vehicle population in Kenya was (in 2000) 530,000. I don't reckon that the number of accidents decreased between 1998 and 2000, so conservatively, take the 1998 accident number, 14,300. Each vehicle then, on average, has about a 1-in-40 chance of being in an accident (I'll bet it's worse today) On Mbirikani, if you are one of the 88,000 cows or shoats, you would seem to have a 1-in-120 chance of being zapped by a carnivore. The sums are flakey, of course, but the point is we seem to be dealing with frequencies that just might be insurable.

_________
HC

Underwriter's reply

Sat, 2007-09-15 06:00 by hcroze

On 22-May-2006, Peter Ndiritu commented as follows:

"... We have received no confirmation from insurers at this stage, but are hopeful that an insurance scheme may be realised.

"On level of compensation, we are proposing settlement on 'agreed benefits' what we may call capital benefits, otherwise market value for the livestock may become contentious. We will work on several options.

"We shall discuss the issue of claim supporting documents with underwriters, but I should presume a report by AERP supported by either KWS or Police records should suffice.

"We have arranged a meeting with one of the underwriters this afternoon and may well be in a position to update you further thereafter."

That was the end of that particular conversation.

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