Swiss weather index insurance specialists CelsiusPro AG have partnered with the World Bank in a project implemented by the IFC to bring more affordable agriculture insurance to the Ukraine through index-insurance techniques.
The aim is to ultimately make agricultural insurance in Ukraine more affordable for smaller companies, expanding farmers’ access to financial services and helping to boost agricultural productivity in the country.
The initiative aims to improve index area yield insurance, with triggers likely based on weather-indices calculated by CelsiusPro, as well as to train insurers to help them sell more localised products in Ukraine.
Index insurance is an innovative approach to insurance provision that helps unlock productivity gains and makes financial services more widely available at lower costs via data analytics. It typically involves parametric insurance policies which are triggered based on index values, typically involving metrics such as actual weather measurements, satellite data and sometimes yield indices which combine a number of weather factors.
“We want to enable local insurers to offer yield shortfall covers, not only to the largest firms, but also to mid-sized and small producers,” Mark Rueegg, Chief Executive Officer of CelsiusPro commented on the launch. “Our firm offers a chain of services from data sourcing, index, and policy design to the automated handling of policies via one platform. Streamlining design, calculation, and policy management processes via our technology is what ultimately reduces costs and makes index insurance affordable.”
Gary Reusche, Program Manager for the Eastern Europe Access to Finance Project, added; “The project aims to offer better quality insurance products at lower premiums. With CelsiusPro and their advanced technology, we have found a strong partner to achieve exactly that.”
The project is implemented by International Finance Corporation (IFC), a member of the World Bank Group, in partnership with the Austrian and Hungarian governments. It builds on seven years of work to develop an agro-insurance market in Ukraine, part of a broader World Bank effort in index insurance implemented through its Global Index Insurance Facility (GIIF).
Since the index-insurance project launched in 2008 over three million hectares of land have been insured by Ukrainian insurers and 8490 contracts have been sold, with a total sum insured of $1.8 billion and more than $80 million in insurance premiums.
However, agri-insurance sales thus far represent less than 10 percent of the market in Ukraine and so more work is required to increase penetration and uptake, hence the focus on developing new index-insurance products for crop yield.