Ecuador launches landmark climate insurance shield
Ecuador has contracted what is said to be its first parametric agricultural insurance policies, benefitting up to 10,000 people in smallholder rice and maize farming households against extreme rainfall and drought-risk.
The placement of these policies in the Ecuadorian insurance market is a major milestone for the Tripartite Agreement Programme – a public-private partnership between the Insurance Development Forum (IDF), the United Nations Development Programme (UNDP), and the German Federal Ministry for Economic Cooperation and Development (BMZ) through the InsuResilience Solutions Fund (ISF) – to build developing countries’ resilience to climate risk.
Ecuador’s agricultural sector is highly exposed to climate shocks, with more frequent and severe floods, droughts and wildfires causing significant crop losses in recent years. These events disproportionately affect Ecuador’s smallholder farmers, who make up 75 percent of all farmers in the country and are critical to domestic food security.
Launched in 2023, the Tripartite Agreement Programme’s Ecuador project, led by the Ministry of Agriculture, Livestock and Fisheries (MAGP), has focused on developing parametric insurance solutions to enable automatic payouts triggered by excessive rainfall or prolonged drought exceeding predefined thresholds. The parametric policies, now live, are designed to deliver faster and transparent insurance payouts, helping farming families recover quickly from climate events and reinvest in subsequent planting cycles.
The two parametric products — for extreme rainfall and drought-risk — were designed by IDF member insurance organizations AXA Climate, Guy Carpenter México Intermediario de Reaseguro S.A de C.V and Blue Marble, in partnership with the MAGP and with local insurer Hispana de Seguros implementing the policies on the ground. This work was co-funded by ISF and the IDF insurance industry members and supported by UNDP. Partners in Ecuador include the Financial and Monetary Policy and Regulation Board, Superintendency of Companies, Securities and Insurance, National Institute of Meteorology and Hydrology, National Assembly of Ecuador and Ecuadorian Federation of Insurance Companies.
Juan Carlos Vega, Ecuador’s Minister of Agriculture, Livestock and Fisheries said: “These parametric insurance policies align with our commitment to provide smallholder farmers with tools that strengthen their sustainability, especially in the face of rising climate change challenges. It is a tool that financially protects them from climate risks and contributes to our country’s food sovereignty.”
Dr. Katharina Stasch, Director-General for Multilateral Development Policy; Transformation; Climate, German Federal Ministry for Economic Cooperation and Development (BMZ) said: “As climate risks continue to rise, collaboration between government, insurance and development partners is more critical than ever. The landmark insurance policies in Ecuador are an example of how countries can unlock resilience through insurance and risk management, creating a win-win where smallholder farmers are protected, local insurance markets strengthened and the country’s agricultural sector bolstered against risks.”
Dr. Nerea Vadillo, AXA Climate Public Sector Technical Lead / IDF Ecuador Project Co-Lead, said: “Through the Tripartite Agreement Programme, IDF members have helped deliver a solution that protects vulnerable farmers on the ground today while strengthening Ecuador’s long-term financial resilience to climate risk. This is what building future-ready nations looks like: scalable, country-led solutions that enable faster recovery, informed decision-making, and greater resilience for those most exposed to climate shocks.”
UNDP is working with the government of Ecuador on capacity building and has supported the development of parametric insurance regulations which enabled the launch of the two pioneering parametric agricultural policies. The objective is to inform national public policy on climate and agricultural insurance, with the potential to scale these two parametric solutions to additional regions, crops, and other sectors.
Marcos Neto, UN Assistant Secretary-General and Director of UNDP’s Bureau for Policy and Programme Support said: “This milestone in Ecuador demonstrates how insurance can be used as a powerful tool for inclusive and climate-resilient development. As countries face rising climate threats, Ecuador’s model offers a scalable and sustainable pathway for governments to protect smallholder farmers and their substantial contributions to the economy and food security.”
Placement of the product has been enabled through premium financing from the ISF for the first coverage period. As a result, 2,511 smallholder rice and yellow maize producers in the climate-vulnerable provinces of Guayas, Los Ríos, Manabí and Loja have coverage for the first planting cycle (January – May 2026), of which 44% are women smallholders and 15% are young people, up to 29 years old. It is expected that at least 300 more producers will have coverage for the second cycle (July – November 2026), with different climatic conditions taken into account.
Dr. Annette Detken, Head of InsuResilience Solutions Fund (ISF), said: “This innovative public-private partnership demonstrates how government leadership, industry expertise, and development finance can come together to build scalable solutions for the most vulnerable. With these two pioneering policies now live, financial resources can flow quickly and predictably to farmers when drought and floods strike, helping to safeguard lives and livelihoods.”
Inka Mattila, UNDP Ecuador Resident Representative, added: “This insurance not only protects crops, it also protects the dreams and hard work of thousands of rural families who feed the country. We are sowing trust to reap resilience.”
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