 Hi, my name is Idor Dror. I'm the Head of Capacity Development at the International Livestock Research Institute and a visiting professor at the University of Geneva, Switzerland. This case takes a unique look at IBLI, Africa's first index-based livestock insurance. While on the surface this case is about insurance, in reality it brings up many other topics relevant to an MBA curriculum, such as microfinance and microinsurance, dealing with bottom-of-the-pyramid expansion strategies and social entrepreneurship in general, as well as more generic financial services and HR-related issues. Tell me a bit more about microfinance. What is it? The whole idea behind microfinance is to spread out financial products to as many people as possible. Okay, so typically it's very small loans. Typically they'll be about $100 or $200 sort of ticket size. So it's way below what formal financial institutions would typically look at. Now let's jump into the case a little bit. Who is Andrew Mude? And what keeps Andrew up at night? What's his main dilemma? We don't know if you should expand further to Kenya. I hope you should go further uphill. Right. Jane, can you tell me a little bit more about the context of, you know, what is IBLI? What are they trying to do? Who are they reaching? Well, basically they offer insurance on an index-based methodology. Okay. And they've been trying to expand to various regions and various countries. Obviously they've had financial challenges and also they can't cope with the expansion costs. Where are these people? Where's the target market here? Kenya here. Okay. Kenya, East Africa. Pastoral communities. Pastoral communities. These are amongst the most vulnerable populations that we have. But what does that matter to us? To ensure it would take, I would assume, a lot of effort to actually go out and assess what's been going on to the initial and specific region and look at the climate implications and then provide insurance for our business. Right. And that effort is translated directly into cost. What's my incentive? The incentive is still to, for the best for your cattle, given the circumstance. Correct. So whether my cattle lives or dies doesn't affect the payout I get. So now suddenly I have every incentive to try and save my livestock. I no longer have an incentive of letting them die. So we're doing, the index is doing a number of things. It's changing the economics of it, making it much easier for insurers to engage. It's reducing the moral hazard. It's reducing administrative costs. So it's doing a lot of things that suddenly make this area of agricultural insurance look a lot more attractive. Because this is traditionally the least attractive, or one of the least attractive areas of insurance. The IBLI case comes with plenty of optional individual and group exercises, including numerical exercises for both beginning and advanced financial classes. The idea behind it is to create a very engaging environment for the students with exercises, clickers, other use of technologies to keep the class very lively and interactive throughout the case. But first let's make sure that we're all okay with the numbers a little bit. So in groups of two, just sit very quickly and do this for a minute. So consider that a pastoralist from Marsabit ensures a cow that's worth $200. The annual premiums are 5% for a 50% deductible. What premium will she have to pay to ensure her cow? Yeah, groups of two or three, whatever is the easiest kind of thing. Group of one does not work. So we have an asset, we have a cow that's worth $200. And the annual premium is? And how do you get to $10? 5% of $200. So now, I want you to quickly do two other. They're still relatively simple. We had a predictability of 25%. What was our strike zone? 15%. So if we take 25 minus 15, we get 10% payout. And what was the sum insured? 200. So 200 times 10% equals? The Iplique case study offers some valuable lessons for operational and marketing classes. And its main dilemma, looking at how to scale up a new enterprise, offers a valuable lesson to both business and non-profit leaders who operate in a tough, high-risk environment. But now, let's talk about what actually happened. What is it like to implement Ibley? How did they get started? The baseline survey. Yeah, baseline survey, yeah. And what did they tell us? Identify risk taking potential. How much people would pay? Willingness to pay, a risk appetite. Did they also check understanding of the concept? Yeah, that's what educated us was those who worked. Right? Yeah? So what did they do? They had to supervise agents for insurance directors. Who's agents? Do they have some of the insurance companies? Insurance company agents. So what's going on with the sales? Well, operational issues on the ground. Yes, so we had existing. We had operational issues. How well is the program going? So we see that the welfare effects seem to be positive. What we want to see are happening. So Ibley actually is living up to what it's set out to do in terms of its welfare benefits. Everyone agrees that Ibley has proven itself in terms of its welfare benefits. It's groundbreaking. It's rock solid science. It's good. Everyone wants it to scale now. That's the challenge. And the question is what people don't agree on is what's their path to scaling? Is it deepening or is it broadening? The Ibley case study asks students to choose between two different expansion strategies, making it perfect for an active class discussion. In fact, the class is usually split down the middle about which way to go. I always ask the students to come up with a concrete management plan and to defend that plan openly in class. Students use data prior reading as well as their personal experiences to come up with their strategies and you can clearly see their managerial and leadership abilities coming to the forefront and being stretched as part of this class discussion. I want you to prepare for a debate. So take half an hour and prepare three or four key points for the debate as to why you really believe that Andrew should follow your advice. So scientifically, the model is meant to work, but they haven't really had a handle on how to commercialize this product that they have. So if you go to another module, yes, we know that you put a strong base, but you wouldn't take such a huge risk on something that you don't really have a handle on. Now I think the only thing is, I want to understand from you guys when you say in deep end, where is the limit? How much more do you want to understand when you say, okay now we are ready now and we can go and implement in other places? I'd like to thank you very much. You've been a wonderful class to engage with. I hope you enjoyed this as well. Thank you very much. Deeper case study is very rich and has multiple layers. So you can make it as complex or as simple as you'd like it to be. It offers multiple lessons for the classroom from how to design a product, testing it in the market and launching a new product to dealing with the complex partnership and donor relations as well as how to achieve commercial sustainability and how to expand into new markets. It covers all the messy details that crop up in a journey along from an idea to a sustainable social business. The Italy case study is a truly interactive multimedia case. It comes complete with a teaching website with videos, photos, media clips, a traditional teaching note but which goes beyond and includes many other case materials and even very detailed assignment questions. All of this makes it very easy for both faculty and students to truly engage with the case study. I hope you enjoy reading and teaching this case study. I'd love to hear from you. If you have questions or feedback about the case please do not hesitate to reach out on the contact section of the website and contact me directly.