Assessment of farmers' perception and preparedness toward crop insurance and weather-based risk management

Introduction

Weather-indexed crop insurance first reached commercial scale in sub-Saharan Africa during the early 2010s, building on pilot programs that used rainfall or satellite-derived vegetation indices as payout triggers rather than requiring costly individual farm loss assessment. This index-based design was intended to solve two problems that had long stalled conventional indemnity-based crop insurance in the region: the prohibitive cost of assessing individual farm losses across dispersed smallholder plots, and the moral hazard risks that indemnity-based products invite when insurers cannot easily verify a claimed loss. Over a decade later, index-based products are now offered commercially by several national insurers across East and Southern Africa, often bundled with input purchases or mobile money platforms to reduce distribution costs. Despite this institutional maturation, enrollment figures across most national programs remain modest relative to the number of smallholder farmers exposed to significant weather risk. Zambia's Copperbelt and Central Provinces present a useful setting for examining why this gap persists, since both zones have experienced index-based crop insurance products for at least five consecutive seasons, providing enough historical exposure for farmers to have formed views based on either direct experience or observed outcomes among neighbors, rather than purely hypothetical expectations about how the product might perform. A recurring explanation offered for low enrollment centers on basis risk: the possibility that an index-based trigger fails to activate a payout even though a farmer experienced a genuine loss, because the index measured regional rainfall or vegetation conditions that did not perfectly track conditions on that farmer's specific plot. While basis risk is a well-documented technical limitation of index insurance, it is less clear how heavily this factor weighs in farmers' actual enrollment decisions relative to more mundane barriers such as premium affordability, distrust built from indirect negative accounts, or simple lack of physical access to an insurance agent capable of processing enrollment and answering questions. This research set out to disentangle these competing explanations using both quantitative survey data and claims records obtained directly from the two insurers active in the study zones. Four questions guided the fieldwork. First, how has awareness of available crop insurance products evolved across the past five cropping seasons, and does awareness growth track enrollment growth at a similar pace? Second, what specific barriers do non-enrolled but aware farmers www.extensionjournal.com cite most frequently, and how do these compare to the basisrisk explanation emphasized in earlier index-insurance literature? Third, does prior personal experience of a successful payout predict re-enrollment and peer recommendation more strongly than secondhand accounts alone? Fourth, what does the claims record itself reveal about which weather perils are actually driving payouts in this specific setting, and does that align with farmers' own risk perceptions? Understanding how these pieces fit together carries direct relevance for national crop insurance program design in Zambia and comparable Southern African settings, where public and donor investment in expanding index-insurance coverage continues to grow even as enrollment figures lag behind ambitious program targets set at the national policy level. If barriers are primarily about affordability and trust rather than fundamental product design flaws such as basis risk, the policy response required looks very different than if farmers are systematically experiencing payout failures that undermine the product's core value proposition.

Materials and Methods

Legal / Regulatory Framework Crop insurance products in Zambia operate under supervision of the Pensions and Insurance Authority, which requires index-based agricultural products to be registered and their trigger methodology disclosed to policyholders in simplified language at the point of sale. Since 2019, national policy has encouraged premium subsidy arrangements for smallholder farmers through a public-private partnership structure, under which government contributes a portion of the premium for farmers enrolled through registered farmer cooperatives, a provision that shaped several of the enrollment pathway questions included in this research's survey instrument.

Materials

The survey covered 384 smallholder farmers drawn from twelve wards across three agro-ecological zones of Copperbelt and Central Provinces, selected to capture variation in historical drought exposure and distance to the nearest insurance agent or bank agent capable of processing enrollment. Claims records covering the 2020-21 through 2024-25 seasons were obtained directly from the two insurers operating index-based crop insurance products in the study zones, disaggregated by triggering peril (drought, flood, or pest outbreak) and total payout value.

Instrument Development / Validation

The survey instrument was piloted with 30 farmers not included in the main sample, and the perception and barrierrecall sections of the questionnaire returned a Cronbach's alpha of 0.77. Two insurance-sector specialists and one agricultural extension officer reviewed the instrument for content accuracy regarding product terminology, and adjustments were made to ensure barrier categories reflected locally relevant language rather than direct translations of technical insurance terms.

Methods

Structured interviews were conducted between August 2024 and February 2025 by trained enumerators, recording awareness recall by season, current enrollment status, barriers to enrollment among non-enrolled respondents, prior payout experience among enrolled respondents, and willingness to recommend the product to other farmers. Awareness and enrollment recall data were cross-checked where possible against insurer registration records for a subsample of 60 respondents, showing 91% agreement between self-reported and recorded enrollment status. Associations between prior payout experience and reenrollment or recommendation behavior were tested using chi-square tests, with statistical significance set at p < 0.05. Ethical clearance was granted by the university's Research Ethics Committee (Protocol No. CUAE/RM/2024-052, dated 14 July 2024), and informed consent was obtained from all respondents prior to interview.

Results

Awareness and enrollment trends, barrier patterns, and claims records together paint a picture of a product that has become progressively better known but whose enrollment growth has not kept pace, compounded by cost and trust barriers that appear to matter more to farmers than the basisrisk concerns that dominate much of the earlier academic literature on index insurance. Premium cost and distrust of the payout process together accounted for the majority of cited barriers, while basis-riskrelated concerns, captured within the broader distrust category during follow-up probing, were mentioned by a smaller subset of respondents than either affordability or general payout skepticism.

Extended Comprehensive Interpretation

Read together, these results reframe the awarenessenrollment gap as substantially a cost and trust problem rather than primarily a basis-risk or product-design problem. Awareness growth outpaced enrollment growth by a wide and persistent margin across all five seasons, and the barriers most frequently cited by non-enrolled respondents, premium cost and payout distrust, point toward affordability interventions and demonstrable payout reliability as more promising levers than further refinement of the underlying index methodology. At the same time, the claims data confirm that the product is functioning largely as designed, with drought payouts dominating in a manner consistent with the region's actual weather risk profile, suggesting that the trust deficit observed in the survey may be disproportionate to the product's actual payout performance and rooted instead in secondhand accounts, delayed disbursement in earlier seasons before mobile money integration, or general unfamiliarity with formal insurance products among first-time enrollees.

Discussion

The main findings of this research show that crop insurance awareness among surveyed farmers nearly doubled over five seasons, from 38% to 69%, while enrollment among aware farmers reached only 44% by the most recent season, leaving a substantial and persistent awareness-enrollment gap. Premium cost and distrust of the payout process, rather than basis-risk concerns specifically, emerged as the dominant barriers cited by non-enrolled respondents, and claims data confirmed that drought-triggered payouts dominate the claims record in a pattern consistent with the region's known rainfall-deficit exposure. These findings agree with a body of earlier work from East African index-insurance contexts that similarly identified affordability and general trust deficits as more significant enrollment barriers than the specific technical limitation of basis risk, despite basis risk receiving disproportionate attention in academic and technical discussions of indexinsurance design. Where this research's findings diverge somewhat from certain earlier reports is in the strength of the personal-experience effect on re-enrollment: several earlier evaluations treated payout experience as a secondary factor behind broader trust and marketing considerations, whereas the chi-square association observed here between personal payout experience and both re-enrollment and peer recommendation was considerably stronger than what those studies documented, suggesting personal experience may carry outsized weight in farmers' enrollment decisions relative to secondhand information of any kind, positive or negative.

Several explanations may account for this disagreement. This research's setting benefited from five consecutive seasons of product exposure, longer than the observation window used in some earlier evaluations, which may have allowed personal-experience effects more time to accumulate and diffuse through farmer social networks relative to studies capturing only one or two seasons of exposure. Additionally, the 2022 mobile money payout integration documented in the product timeline plausibly improved actual payout speed and reliability partway through the observation period, meaning farmers enrolling or renewing after that milestone may have formed more favorable direct experiences than those whose views were shaped by earlier, slower disbursement processes. The broader implication for national crop insurance programming is that promotional campaigns focused solely on raising awareness are unlikely to close the enrollment gap on their own, given that awareness already substantially outpaces enrollment in this setting. Interventions that directly address premium affordability, such as the www.extensionjournal.com cooperative-linked subsidy pathway already in place, alongside continued investment in payout speed and transparency, appear better matched to the barriers farmers themselves report than additional general-awareness messaging.

Conclusion

Acknowledgement

Acknowledgements Institutional SupportThe authors thank Copperbelt University of Agricultural Economics for research facilities and the two participating insurers for providing anonymized claims records used in this research. Contributions Not Qualifying for AuthorshipThe authors acknowledge the enumerator team responsible for household-level data collection across the twelve wards covered by this research. Funding SourcesThis research was funded through the host university's internal agricultural economics research allocation, with no direct financial contribution from either participating insurer.

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