Quality of a hypothetical index insurance contract based on the segmented (<i>sm)</i> regression model with LMD data (R² of 0.47 and <i>RIB</i> of 0.5) for 8 years and 15 sub-locations in Marsabit, Kenya (points), compared to a perfect insurance contract and to no insurance (lines).

<p>The following classification was used for the contract: True Negatives: No payment due and none paid; Severe False Negatives: contract underpays by more than 30%; Intermediate False Negatives: contract underpays between 10% and 30%; Small False Negative: contract underpays less than 10%, and False Positives: contract overpays.</p>