Swiss Re partners with Oxfam America and the World Food Programme on microinsurance

Swiss Re have announced that they are to partner with Oxfam America and the World Food Programme as a founding sponsor and provider of re/insurance to the R4 initiative. The initiative aims to help poor rural communities protect their crops and livelihoods from the risks of climate change.

The R4 initiative is seeking to address the need of farmers who face climate risks by promoting a framework which integrates physical disaster reduction methods with innovative and affordable weather risk transfer solutions.

“Insurance is an important component of an effective local climate adaptation strategy,” said Thomas Wellauer, Swiss Re’s COO. “It not only protects the livelihoods of poor households when harvests fail, but also facilitates farmers’ access to credit and risk transfer solutions.”

R4 seeks to address four key risks which face farmers in developing countries; community risk reduction, productive risk taking, risk transfer and risk reserves. Swiss Re are the only commercial reinsurer on the advisory board and as a result will take the lead in developing innovative risk transfer solutions.

The R4 initiative offers a insurance-for-work policy which allows farmers to take out weather-index insurance and pay for their premiums with labour instead of cash. The participants will work on forestry and irrigation projects which are designed to reduce climate impacts on their village and community.

“Making vulnerable communities more resilient to shocks and more food secure is a central objective of WFP in its global fight against hunger and malnutrition,” said WFP Climate Change Coordinator, Carlo Scaramella. “Through R4, WFP’s proven food and cash-for-work programmes will help poor people seize new opportunities to diversify and enhance their income and food security. Insurance can help the most vulnerable better manage risks.”

The initiative will start operating in Ethiopia first in November 2011 and then expand into three other countries for an initial period of five years.