Liberty Mutual Re launches parametric coverage to protect Colombian farmers from climate risks
Liberty Mutual Reinsurance (LM Re), part of the Liberty Mutual Insurance Group, has launched a parametric agriculture product to financially safeguard Colombian farmers against adverse climatic conditions, in collaboration with XS Latam—part of the XS Global Group—and SFA CEBAR.
The LM Re-developed livestock farming product leverages the expertise of leading parametric flood platform Floodbase and EarthDaily, which provides advanced geospatial data and analytics to the agriculture sector. It aims to make Colombian farming much more resilient by preventing farmers from losing their land, as so often happens following severe weather-related events.
Such extreme events occur frequently in Colombia, which is highly susceptible to both flood and drought due to its diverse topography. In November, flooding devastated thousands of farms and during the last 10 years Colombia has experienced some of the most severe droughts in its history.
The product indemnifies farmers against both perils, extending the scope of a successful LM Re drought protection pilot last year. Its solution will allow clients to benefit from highly advanced flood mapping technology, with the product’s innovative trigger mechanisms delivering swift financial relief to affected policyholders.
The product also overcomes one of the main regional issues of frequent cloud cover hampering satellite information, which has rendered previous similar parametric products unsustainable in Colombia, with LM Re able to deliver a basis measure of the index daily.
Jean-Christophe Garaix, head of agriculture and parametrics, LM Re, said: “With farmers in Colombia routinely relying on annual loans to farm their land, should adverse weather cause a herd loss, many must sell land to repay the loan. This product is designed to mitigate that risk, making farming much more resilient. It also simultaneously reduces the risk banks face in offering finance, creating the potential for cheaper loans, which will further help support resilient farming in Colombia.”
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