The risk transfer solution, backed by the Natural Disaster Fund (NDF) and in partnership with Bao Minh Insurance Corporation, provides timely relief to coffee growers affected by drought.
Willis and Global Parametrics have launched the first ever pay out of an innovative parametric policy distributed 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. 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 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 UK government’s Foreign, Commonwealth and Development Office and Germany’s development bank KfW.
Willis, managing director, Alternative Risk Transfer Solutions, Claire Wilkinson said that the programme supports the resilience of coffee farmers in Vietnam against the impacts of an increasingly volatile climate, giving them much-needed financial support and allowing them to recover quickly when adverse weather threatens their livelihoods.
The Coffee Climate Protection Insurance programme was developed by Willis and Global Parametrics as part of the wider “De-Risk South-East Asia” initiative in partnership with ECOM Agroindustrial Corp. Ltd, Bao Minh Insurance Corporation and the University of Southern Queensland in Australia.
Vietnam is the world’s second largest coffee producer, with coffee playing an important role in the country’s export economy. However, coffee production is highly sensitive to weather conditions, especially rainfall and temperature. This risk transfer solution provides a safety net for these farmers, ensuring that they can continue their operations even in times of drought.