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Risk management companies Willis and Global Parametrics have delivered the first payout of a parametric policy to coffee farmers in Vietnam who suffered losses due to low rainfall during the 2024 coffee growing season.
In early 2024, Willis placed the parametric solution with Bao Minh Insurance Corporation in Vietnam, protecting coffee farmers’ revenue against a lack of yield due to low rainfall during the critical flowering period. This risk transfer solution is designed to provide a safety net for these farmers, ensuring they can continue their operations even in times of drought.
The solution uses satellite data to measure rainfall levels in the country’s coffee-growing regions. If the rainfall dips below predefined values, the insurance is triggered and the farmers receive timely payouts without the need for lengthy claims processes or on-the-ground assessments.
Risk capacity to support the payouts was provided by the Natural Disaster Fund (NDF), a public-private partnership managed by Global Parametrics, a subsidiary of CelsiusPro Group specialising in parametric protection against climate and natural disaster risks. The NDF is funded by the United Kingdom government’s Foreign, Commonwealth and Development Office and Germany’s development bank KfW.
Laurent Bossolasco, Sustainability Manager at family-owned coffee merchant ECOM Agroindustrial Corp says it is vital for the survival of the coffee industry that the weather, market, and agricultural risks borne by farmers are shared by market participants.
“Changing rainfall patterns, droughts and higher temperatures are part of the farming equation and parametric insurance can be a meaningful tool for coffee producers to adapt to climate change,” he says.
The Coffee Climate Protection Insurance (CCPI) program was developed by Willis and Global Parametrics as part of the wider ‘De-Risk South-East Asia’ initiative in partnership with ECOM Agroindustrial Corp, Bao Minh Insurance Corporation, and the University of Southern Queensland (UniSQ) in Australia.
Angus Kirk, Chief Executive of Global Parametrics, says: “We are delighted that the parametric cover has effectively protected coffee farmers in Vietnam. Many of these farmers operate on a small scale with limited financial resources, which constrains their ability to cope with the impact of deviations in rainfall and temperature patterns on their crops. We look forward to continuing our work with our partners in Vietnam.”
The post New parametric solution delivered for drought-stricken coffee farmers in Vietnam appeared first on Global Coffee Report.
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