Liberty Mutual Re, Insurtech Sprout Offer Parametric Cover for Kenyan Coffee Farmers Facing Climate Risk

Liberty Mutual Reinsurance (LM Re), part of Liberty Mutual Insurance Group, has partnered with insurtech firm Sprout Inc. and the Kenyan insurer Britam to launch a parametric insurance product, which aims to protect Kenyan coffee growers from financial losses due to drought.

Developed in the Lloyd’s Lab innovation accelerator, the product is triggered by specific weather events and provides swift payouts and immediate financial support to mitigate the risks of crop failures.

Leveraging its expertise in technology-driven insurance solutions in the agricultural sector, Insurtech Sprout uses satellite data and machine learning to assess historical weather patterns, empowering farmers to maintain productivity despite climate challenges. LM Re has supported the solution since its inception, through shaping the structure of the coverage and the capacity allocation.

The product is designed not only to protect against climate risks but also to address the specific needs of coffee growers, incorporating real-time advisory services to assist farmers in adapting their farming practices based on weather forecasts, thereby enhancing their resilience.

The innovative scheme, in which coverage premium is funded by global coffee buyers, supports local operations while minimizing operating costs for Kenyan farmers, said LM Re, explaining that this approach ensures that farmers can quickly recover from adverse conditions, maintaining their livelihoods.

By keeping financial resources within Kenya and supporting local agriculture, the new insurance product aims to bolster the local economy and promote sustainable farming practices, offering a crucial safety net for farmers facing increasing climate variability.

The product launches with the support of Kenyan insurer Britam in order to align with regulatory and industry efforts to close the insurance protection gap and provide more comprehensive coverage options for local farmers.

“This launch is testament to our commitment to providing innovative insurance solutions that empower local communities in emerging markets to be more climate resilient,” commented Jean-Christophe Garaix, head of Agriculture and Parametrics, Liberty Mutual Re, in a statement.

“Partnering with Sprout allows us to combine our reinsurance expertise with their deep understanding of agricultural needs, resulting in a product that offers tangible benefits to Kenyan farmers and provides a stabilizing effect for the local economy,” Garaix continued.

“This coffee product is a catalyst to unlock production potential and climate financing options for smallholder farmers in Kenya. Partnering with LM Re allows us to deliver a robust product and support farmers when they need it most,” according to Ashley King-Bischof, CEO of San Francisco-based Sprout.

“As part of our sustainability strategy, we aim to champion innovative microinsurance solutions that not only safeguard vulnerable populations, such as small-scale farmers, from climate risks but also deepen financial inclusion among the low-income population,” said Tom Gitogo, managing director and CEO of Britam Group, the Nairobi, Kenya-based financial services group.

“These emerging risks are underserved in the market and to address this gap, Britam partners with local and global organizations to develop innovative solutions,” Gitogo added.

Source: Liberty Mutual Reinsurance

Topics
InsurTech
Tech
Agribusiness
Climate Change