Within the framework of IFAD’s participation in COP27, INSURED will host the side-event “Strengthening farmers’ resilience through climate risk insurance: Who pays and how?”, to be held on 17th November.
Climate risk insurance plays a key catalytic role in strengthening smallholder farmers’ resilience to potentially devastating risks – including drought, heatwaves, floods and storms. However, current levels of insurance coverage are shockingly low. Globally, less than 20 per cent of smallholder farmers have agricultural insurance, and that number is less than 3 per cent in sub-Saharan Africa. Insurers typically have little presence in rural markets, while farmers are mostly unfamiliar with insurance and struggle to pay for products.
Making climate risk insurance work for smallholder farmers is a growing strand in IFAD’s drive to support resilience. Insurance compensation following shocks and losses boosts small farming households’ food security, helps stabilize rural economies, and strengthens the resilience of the food systems we all depend on.
Although evidence is mounting about the benefits of insurance, enabling farmers to access affordable cover is a complex task involving multiple stakeholders. Building effective partnerships between public and private players is essential. Since 2018, INSURED, financed by Sida and implemented by IFAD through the Platform for Agricultural Risk Management (PARM), has been supporting integration of climate risk insurance within the IFAD-financed agricultural development portfolio and with its partners, including governments, market institutions and small-scale producers.
“Who pays for climate risk insurance?” is a simple question – but it has many answers. In many developed agricultural insurance markets, premium financing in the form of government subsidies is the norm. However, in the Global South governments face budgetary constraints and smallholder farmers have limited resources, particularly at the start of the season when premiums are payable.
The panel will unpack the experience of premium financing from the work of the INSURED programme and its partners. It will look at the pros and cons of subsidizing insurance premiums and experiences with different payment models will be presented, including private sector pre-financing and other opportunities of sector pre-financing, and at the challenges and opportunities for different stakeholders.
The agenda will be available soon.
Since 2018, INSURED, financed by Sida and implemented by IFAD through the Platform for Agricultural Risk Management (PARM) has been supporting integration of climate risk insurance within the IFAD-financed agricultural development portfolio and with its partners, including governments, market institutions and small-scale producers. More