By Gloria Dickie and Simon Jessop
LONDON (Reuters) – The damage wrought by climate change has spurred countries and communities across the developing world to look at using so-called ‘parametric’ insurance to help cushion the financial blow.
Guaranteeing a set payout once a specific event occurs, the cover is seen as a way to build resilience among impacted communities, yet the long-term viability of projects is often dependent on government efforts to adapt to worsening weather.
Below are a selection of projects launched in recent years which have already paid out.
Country: FIJI
Year launched: 2022
Project leader: U.N. (UNCDF, UNDP, UNU-EHS)
Insurer: Fiji Care Insurance Limited and Sun Insurance
Reinsurer: SCOR
Supported by: Governments of New Zealand, Australia, India, and Luxembourg
Perils insured: Cyclones – heavy wind and rainfall
Reach: 2,147 people
Payouts: In January and February 2023, the program paid out $110,000 FJD ($50,000 USD) to 559 smallholder farmers, fishermen, market vendors
Country: COLOMBIA
Year launched: 2018
Project leader: Blue Marble and Nespresso
Insurer: Seguros Bolivar
Reinsurer: Zurich Re, Trans Re, Aspen and ASSA
Supported by: The Government of Colombia
Perils insured: Excess rainfall and drought
Reach: 8,000 farmer households
Payouts: In 2022, the program paid out $3 million USD to 6,475 smallholder coffee farmers.
Country: ZIMBABWE
Year launched: 2016
Project leader: Blue Marble and World Food Programme, and agribusinesses
Insurer: Old Mutual in Zimbabwe
Reinsurer: Blue Marble owner companies
Supported by: World Food Programme and agribusinesses
Perils insured: Excess rainfall, drought and cyclones
Reach: 25,000 people in 2021/2022 season
Payouts: In 2021/22 season, the program paid out $55,822; $206,113 in payouts-to-date
Country: VANUATU
Year launched: 2022
Project leader: U.N. (UNCDF, UNDP, UNU-EHS)
Insurer: VanCare Insurance Limited
Supported by: Governments of New Zealand and Australia
Perils insured: Cyclone (wind only)
Reach: 122 people
Payouts: In March 2023, the program paid out VT25.56 million ($217,000 USD) to 84 people for Cyclones Kevin and Judy
COUNTRY: KENYA
Year Launched: 2022
Project leader: Lemonade Foundation
Reinsurer: Lemonde Foundation
Supported by: Lemonade Foundation
Perils Insured: Extreme weather during crop growing season
Reach: 7,000 farmers
Payouts: In February 2023, the program paid out $167,791 USD to 3,248 people for drought.
COUNTRY: GUATEMALA
Year Launched: 2021
Project leader: World Food Programme
Insurer: Aseguradora Rural
Supported by: Government of Canada, European Union, IFAD and WFP
Perils Insured: Excess rainfall and drought
Reach: 9,400 smallholder farmers as of 2022, of which 1,659 people made contribution of 10% of insurance premium
Payouts: In 2021, the program paid out Q 270 ($100 USD).
COUNTRY: INDIA
Year Launched: 2023
Project leader: Kerala Cooperative Milk Marketing Federation (MILMA)
Insurer: Agricultural Insurance Company of India Ltd
Supported by: MILMA
Perils Insured: Decline in milk production during extreme heat days
Reach: 14,500 cattle covered at a price of 100 INR ($1.22 USD) per animal.
Payouts: Shortly after launching in April 2023, the trigger was reached. The product will pay out more than the premiums collected at the end of March.
(Reporting by Gloria Dickie and Simon Jessop)
