However, there is also scope for more direct parametric products, such as Livelihood Protection Policies (LPPs) which offer cash payouts to low-income individuals in the Caribbean. 31 individuals, including small- holder farmers in Saint Lucia, received payouts totalling USD 102,000 on their LPPs after Hurricane Matthew, also within 14 days. In addition, an SMS-based warning systemmitigates future losses by informing clients of approaching events so they can employ risk reduction strategies. Technology is a vital enabler of value Where the high cost of verifying losses on large numbers of small rural landholdings would make traditional insurance unviable, some companies have turned to new sources of data via technology such as satellite data for risk assessment and loss adjusting. The Research Programme on Climate Change, Agriculture and Food Security (CCAFS) has noted: “advances in satellite technology and data analysis help avoid the pitfalls of high transaction costs and therefore expand the potential reach of insurance policies to rural areas previously considered uninsurable.” 18
Drones and sensors are also being used to gather risk data and assess damage. In West Africa, CCAFS is integrating index-based insurance with climate risk management strategies including climate information services, and providing technical input to Nigeria’s plans to scale up agricultural insurance for 15 million of its small-hold farmers. 19 The WINnERS Project in Tanzania integrates remote sensing and field observations to model agricultural losses for maize farms based on weather-related risk such as rainfall deficit or heat stress. 20 A successful distribution partner needs to be trusted by the end-customer and that
comes from the number of successful interactions the customer had with them.
- Quentin Gisserot, AXA
18 CGIAR, Climate Change, Agriculture and Food Security Research Program, “Climate Services and safety nets”, https://ccafs.cgiar.org/themes/index-based-insurance 19 CGIAR, Climate Change, Agriculture and Food Security Research Program, “Climate Services and safety nets”, https://ccafs.cgiar.org/themes/index-based-insurance 20 http://www.winners-project.org/work-programmes/agriculture-weather-risk/
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