The Agricultural Association of Young Farmers (ASAJA-JAEN), a Spanish olive growers’ cooperative, has announced that 100% of its members that subscribed to a parametric insurance scheme through a deal with Meteo Protect, have received compensation after regional temperature highs.
Earlier this year weather index insurance specialist, Meteo Protect, secured a deal with ASAJA-JAEN that would open up its parametric insurance solutions to the Spanish olive growing community.
Now, after members experienced unseasonal weather this spring, with average temperatures of 15.4°C, which is 1.7°C above the seasonal average for the region, 100% of those that subscribed have received compensation, the cooperative has announced.
Gabriel Gross, Chief Executive Officer (CEO) of Meteo Protect, said; “Due to the limitations of traditional insurance products, olive tree farmers in the region have historically not been fully compensated when faced with the reductions in yields and quality as a result of unseasonal weather conditions.
“Today’s announcement by Asaja- Jaén that 100% of their membership who subscribed to weather insurance have already received compensation following the extreme temperatures of this spring, and that Asaja-Jaén is encouraging its membership to subscribe to the next coverage period, is a very welcome confirmation that our parametric weather insurance products are effective and essential for farmers to remain competitive in today’s climate.”
That those who have subscribed have already received payout underlines the rapid-response characteristics of insurance, and indeed reinsurance or ILS solutions, structured around a parametric trigger, enabling those in need to receive funds much faster than a traditional product, ultimately mitigating the financial and economic impact adverse or unseasonal weather has on the agricultural sector.
The cooperative only launched Meteo Protect’s parametric insurance platform in February this year, and is unsurprisingly urging members to purchase protection for the next critical development stage of the olive trees, after the conclusion of the spring coverage period.
Meteo Protect provides the cooperative with a fully-branded underwriting and pricing platform that uses the SAP HANA® platform, “to provide completely customized insurance for any weather-related risk for the olive growers.”
Via the platform, named Olea, cooperative members are able to select their insurance policy specifications, which includes factors such as geo-location, crop, the coverage period, and also weather parameters, explains the cooperative.
The platform then aggregates weather-related data, analyses risks, and prices and underwrites the policy in real-time.
“Index-based weather insurance is fully customized to fit the needs of each grower, designed to compensate the losses incurred through adverse weather conditions. Unlike traditional insurance, indemnification is simple and automatic, requiring no field loss assessment, deductible or adjustment,” said the cooperative.
It’s a clear example of the benefits of transparent parameters being embedded into risk transfer triggers, be that for insurance, reinsurance, catastrophe bonds or other ILS structures.
Parametric risk can be particularly attractive to ILS or reinsurance-linked investors, given the ease with which a portfolio of parametric contracts can be analysed and managed.
For the protection buyers the benefits are also clear, offering a rapid payout often much more speedily than a traditional indemnity based insurance or reinsurance policy can.