Ecuador’s agricultural sector is crucial to its economy, with maize and rice essential for smallholder farmers. To protect them from climate risks, a consortium led by ISF is launching the country’s first parametric weather index insurance. This initiative aims to provide affordable insurance coverage for the most vulnerable farmers while ensuring financial inclusion through innovative payout methods and effective communication strategies.
Agriculture plays a crucial role in Ecuador’s economy and food security, engaging 17.9% of the country’s workforce and supplying around 60% of basic food needs. Maize and rice are essential for smallholder farmers, who rely on these crops for daily sustenance and income. However, natural hazards like floods, storms, and El Niño-related events increasingly threaten agricultural stability and rural livelihoods in Ecuador.
To help smallholder maize and rice farmers mitigate climate risks, the InsuResilience Solutions Fund (ISF) has formed a partnership with an international consortium that includes Guy Carpenter Mexico, AXA Climate, Blue Marble Microinsurance, and Campo Seguro, with support from Ecuador’s Ministry of Agriculture and Livestock (MAG). This initiative aims to introduce Ecuador’s first parametric insurance solution tailored for smallholder farmers.
Currently, the Campo Seguro program primarily offers indemnity-based insurance, which many small farmers cannot access. The new parametric insurance seeks to fill this gap, ensuring that vulnerable farmers at the economic base receive affordable protection against climate-related threats. This represents the first experience with parametric insurance within the country.
Additionally, the United Nations Development Programme (UNDP) in Ecuador will assist the consortium in aligning the insurance product with climate-smart agricultural methods and enhancing cooperation with governmental bodies. This collaboration emphasizes innovative approaches to sustainability in agriculture.
One of the major obstacles faced by smallholder farmers is limited access to banking services, preventing many from receiving payouts from insurance claims. To resolve this, the consortium is considering various payout methods, including money orders, which will allow farmers to obtain cash at nearby bank branches, increasing the financial accessibility of insurance benefits.
Moreover, the consortium plans to enhance communication with farmers through mobile technology, providing vital weather alerts, risk prevention strategies, and information about payouts. These channels will ensure that farmers remain informed and supported, marking a substantial improvement in climate risk management for Ecuador’s agricultural community.
The initiative to implement parametric weather index insurance for Ecuador’s smallholder farmers addresses critical challenges posed by climate change. Through collaborative efforts from various organizations, the project aims to provide accessible insurance solutions, foster climate-smart agricultural practices, and ensure financial inclusion. The innovative payout mechanisms and communication strategies further enhance the initiative’s effectiveness, promoting resilience among vulnerable farming communities and securing the agricultural future of Ecuador.
Original Source: www.preventionweb.net
