Known as Index Based Livestock Insurance or IBLI, payouts are triggered when satellite images show that grazing lands in the region have deteriorated to the point that herders are expected to be losing more than 15 per cent of their herd. The current readings for which indemnities are now being paid show that between 18 and 33 percent of livestock have been lost to drought this season.

"It's terrible that we are seeing this level of loss, but gratifying that the policies are doing what they are supposed to do, which is to help herders avert disaster when weather conditions dry up pasture lands and animals begin to perish," said Isaac Magina, head of agriculture insurance at UAP Insurance Ltd.

"When you look at a 33 per cent loss, that is a significant portion of the asset base of any business and it would be difficult to survive without insurance," added Mr Magina.

The insurance project was developed in partnership by the Nairobi-based International Livestock Research Institute (ILRI), Cornell University and the Index Insurance Innovation Initiative (I4) programme at the University of California at Davis. Commercial partners Equity Bank and UAP Insurance Ltd. implement the programme. The IBLI project is funded by USAID, the European Union, the British Government, the World Bank, the Microinsurance Facility and the Global Index Insurance Facility.

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