Liberty Mutual Re backs parametric insurance for Kenyan coffee growers

Liberty Mutual Reinsurance (Liberty Mutual Re), the reinsurance arm of the Liberty Mutual insurance group, is providing the capacity to support a new parametric insurance program to benefit Kenyan coffee growers.

Working with insurtech Sprout, Inc (Sprout) and diversified financial services firm Britam as the local underwriter, this new parametric insurance product is designed to protect Kenyan coffee growers from financial losses caused by drought.

The parametric insurance will cover farmers and provide rapid payouts when trigged by specific weather events, providing them with immediate financial support to mitigate the risks of crop failures.

Sprout uses satellite data and machine learning to analyse and assess historical weather patterns, while Liberty Mutual Re has supported this parametric insurance solution since its inception, helping to shape the structure of the coverage and the capacity allocation.

As well as protecting the coffee growers against climate risks, the product is also designed to help them through the incorporation of real-time advisory services to assist the farmers in adapting their farming practices based on weather forecasts, to increase their resilience.

This is worth commenting on, as it’s both interesting and encouraging to see.

With insurance and reinsurance being a data-led industry with deep expertise in weather, climate and how that affects communities and industries, to see an insurance product looking to complete the virtuous data loop of feeding inputs back to the policyholders, to better inform their everyday business, is fantastic to see.

It’s no surprise to see this coming through a parametric risk transfer product, given the use of real-time (or near as possible) data within the triggers of parametric insurance and reinsurance structures.

In this case, the data that is being used to protect the customer, through the real-time activation of the coverage under the parametric trigger, can be put to work just as productively to help inform the coffee growers decision-making throughout the year.

Kudos to those involved for being forward-thinking and finding a way to complete this virtuous data loop, to the benefit of the customer and their resilience as well.

Jean-Christophe Garaix, Head of Agriculture and Parametrics, Liberty Mutual Re, commented, “This launch is testament to our commitment to providing innovative insurance solutions that empower local communities in emerging markets to be more climate resilient. Partnering with Sprout allows us to combine our reinsurance expertise with their deep understanding of agricultural needs, resulting in a product that offers tangible benefits to Kenyan farmers and provides a stabilizing effect for the local economy.”

Ashley King-Bischof, CEO, Sprout, added, “This coffee product is a catalyst to unlock production potential and climate financing options for smallholder farmers in Kenya. Partnering with LM Re allows us to deliver a robust product and support farmers when they need it most.”

Tom Gitogo, Managing Director and CEO, Britam Group, also said, “As part of our sustainability strategy, we aim to champion innovative microinsurance solutions that not only safeguard vulnerable populations, such as small-scale farmers, from climate risks but also deepen financial inclusion among the low-income population. These emerging risks are underserved in the market and to address this gap, Britam partners with local and global organizations to develop innovative solutions.”