Global reinsurer Munich Re has collaborated with parametric insurance platform, Raincoat and Cloud to Street (C2S), a climate adaptation technology firm, on the delivery of a country-level flood parametric program for smallholder farmers across Colombia.
Flood intelligence firm C2S says that this program is the world’s first scalable parametric flood insurance policy, and is designed to protect Colombian farmers against adverse financial impacts from flood events.
The offering is powered by C2S’ flood intelligence, which provides flood data streams including optical and radar satellites, historical flood maps, and on-the-ground intelligence, with machine learning to produce essential and actionable insights about the extent and impact of ongoing floods.
For the Colombia program, the data provided by C2S enables partners to set the specific parameters for flood risk that made the creation of comprehensive policies possible. By using this data, Raincoat, which develops scalable embedded climate insurance products, was able to provide a product and platform that enables rapid payout to farmers following a flood event.
Peter Lacovara, parametric insurance expert and Head of Commercial at C2S, commented: “Global flooding threatens billions of people and remains the most common and costly natural peril. Worsening climate change underscores the need to prioritize climate adaptation and financial solutions to support those affected by natural disasters. We couldn’t be prouder to help make insurance protection available to tens of thousands of Colombian farmers for the first time, and we’re poised to assist in building similar parametric flood insurance programs worldwide.”
For vulnerable and poorer parts of the world, parametric insurance provides an alternative to traditional insurance solutions, as payout is based on pre-determined parameters, such as the amount of rainfall in a certain location, rather than the physical damage occurred. Importantly, this enables rapid payout post-event.
Under the new program in Colombia, insured farmers will receive a loan relief based on the magnitude of floods that hinder their abilities to grow crops and bring them to market. And, as this program is country-wide, it ensures farmers in the most remote parts of the country can receive immediate financial relief when a flood strikes.
Jonathan Gonzalez, CEO of Raincoat, said: “Floods are a serious risk for most individuals and families, and being able to provide some protection from these events at scale has been a priority. C2S allows us to do this. In this rollout, no one is excluded – every region and every farmer is being covered.”