Global Parametrics, a parametric and index-based disaster risk transfer company, has partnered with brokerage group Howden to provide small farmers in Africa with an extension to their parametric insurance scheme through the One Acre Fund.
The expansion of the parametric insurance scheme is expected to bring nearly 1 million farmers under risk transfer arrangements.
Global Parametrics has been working with the One Acre Fund in Tanzania since 2020 to provide farmers with parametric solutions covering excess rainfall and drought risks.
Nearly 175,000 smallholder farmers in Tanzania and Malawi are already covered by parametric risk transfer schemes, while the announced expansion of the scheme enables smallholder farmers in Rwanda to now be covered.
Including Rwanda, a further 800,000 people are expected to be protected, bringing the total number of people covered in the three African countries to almost 1 million.
This parametric product provides financial protection and resources to help farmers mitigate the effects of extreme weather.
The parametric solution is backed by the Natural Catastrophe Fund, a public-private partnership managed by Global Parametrics, with seed investment from the UK Foreign, Commonwealth and Development Office and Germany’s BMZ via KfW, while global reinsurer Hannover Re provides matching capabilities.
Global Parametrics noted that the East African drought affecting Tanzania and Cyclone Freddy, which killed more than 100 people in Malawi, highlighted the need for more protection for vulnerable farmers in the region.
Following these events, the Tanzania and Malawi components of the Parameter Program are expected to disburse more than $650,000 to small farmers in those countries’ One Acre Funds.
Insurance and reinsurance group Howden is providing premium subsidies to support the expansion of parametric protection in Rwanda.
This allows the One Acre Fund to purchase additional parameter coverage, extending assistance to more smallholder farmers who are vulnerable to extreme weather risks.
Angus Kirk, CEO of Global Parametrics, commented: “We are delighted to partner with Howden and continue to strengthen our relationship with One Acre Fund in its efforts to address extreme weather and natural disaster risks in climate fragile countries.
“We hope this is the first of many partnerships with Howden and we look forward to working together to make a positive impact in the communities we serve.”
Howden Chief Executive David Howden added: “We are proud to support this impressive programme, which is a great example of how insurance can help vulnerable communities become more resilient and have the confidence to invest in their future.
“We would like to see initiatives like this play a bigger role in the global response to the climate crisis. To achieve this, we must bring private finance to the negotiating table in a much bigger way, reaching those facing the worst impacts of climate change Access to financial instruments that most companies take for granted.”