The first parametric agricultural insurance programme has been launched in Cameroon, by AXA Cameroon and AXA Climate in collaboration with the World Bank Group’s Global Index Insurance Facility (GIIF).
Also working with local insurer ACTIVA Assurance, the collaboration has resulted in the launch of a project to insure tens of thousands of Cameroonian farmers on a parametric trigger basis against exposure to climate related risks.
A two-year pilot programme was formally launched by the Cameroon Ministry of Agriculture and Rural Development on 2nd August.
For the current year 2019, the programme will provide parametric insurance protection for the revenues of nearly 8,000 cotton growers in Northern Cameroon, covering them against low crop yield due to drought.
AXA Cameroon drove the project on the ground, providing insurance capacity as well as capacity building, training and education on parametric insurance for local partners, including the country’s cotton association, the National Confederation of Cameroon Cotton Producers (CNPCC) and Sodecoton.
AXA Climate, AXA’s parametric climate risk insurance centre of expertise, provided technical and risk modelling support, as well as utilising its expertise on climate and new data technologies, plus providing reinsurance capacity to support the programme.
The parametric insurance product features policies that will payout based on satellite data that measures drought conditions in the covered areas.
“This innovative collaboration is directly aligned to our mission to provide immediate protection for communities against climate risks. Parametric insurance is instrumental in supporting growth of risk transfer solutions across emerging countries,” explained Antoine Denoix, CEO of AXA Climate.
“The launch of this new insurance product addresses the challenges of weather risks for a very vulnerable sector of the Cameroon economy. Now the insured farmers know that their income will be protected from production shortfall no matter the weather,” Thierry Kepeden, CEO of AXA Cameroon added.
AXA Climate has developed a specialism in Public-Private Partnerships for Africa, having also established a similar parametric drought insurance programme in Senegal with the national agriculture insurer.
The specialist parametric insurance and reinsurance unit of AXA has also developed parametric insurance products in Cote d’Ivoire.
AXA Climate also provides reinsurance to sovereign risk pool the African Risk Capacity, as well as the World Food Programme’s R4 Resilience initiative.
“The programme in Cameroon strengthens the strategic partnership between AXA and the World Bank Group’s GIIF which was signed in 2015 to develop parametric insurance in emerging countries, notably in Africa, Asia and Latin America,” explained Marieme BA, who leads development of inclusive insurance programs for AXA in the CIMA countries. “The aim is to expand this experience to other crops such as maize, sorghum and livestock, pursuing to create synergies with all the agriculture value chain stakeholders to build resilience for farmers.”