The recurrent drought has had devastating effects on pastoralists and agro-pastoralists in Kenya. Marsabit County located in the Northern part of Kenya, is one such region where pastoralist’s households have continuously experienced severe consequences of drought. Affected pastoralists are often forced to employ short term traditional drought coping strategies such as migrating with herds to other regions, distributing herds amongst their relatives and borrowing herds from clan members. Drought related risks often affect the entire region thus rendering traditional risk sharing arrangements insufficient. Many a times the entire livelihoods of the pastoralists are threatened since livestock which is their only source of income and food, perish in great numbers during severe drought. It is in response to such needs and due to the absence of formal insurance in this region that International Livestock Research Institute, Equity Bank and UAP Insurance rolled out Index Based Livestock Insurance (IBLI). IBLI, just like other insurance products, compensate its clients in the event of a loss. Unlike traditional insurance which assesses losses on a case by case basis and makes payouts based on individual client’s loss realizations, IBLI offers policy holders within geographically defined areas payouts when the area based indicator is triggered.