The Government of Mexico, through the Ministry of Finance & Public Credit, the Insurance Development Forum (IDF), the United Nations Development Programme (UNDP) and the German Government, today announced the launch of a Tripartite project in Mexico to develop a sovereign parametric insurance solution for climate-vulnerable smallholder farmers, supported by investments in long-term risk finance and insurance market development.
Led by IDF members AXA, Guy Carpenter, Munich Re and Swiss Re, the public private partnership includes Mexican state-owned re/insurer Agroasemex as a key local partner for the national insurance programme to be developed. The insurtech company Raincoat will provide the IT insurance platform and, during the project roll-out phase, the local market will be invited to participate in the programme.
In parallel to this, UNDP will be offering technical and coordination assistance to both help deliver on the industry-led risk financing solution and combining that with long-term investments to integrate risk-financing and insurance into national development strategy and delivery.
This is the first country project to be launched in 2022 under the Tripartite Agreement announced in 2019 between the German Federal Ministry for Economic Cooperation and Development (BMZ), the IDF and UNDP, to deliver technical assistance and risk financing solutions to twenty countries vulnerable to climate change by 2025.
The InsuResilience Solutions Fund (ISF), funded by the KfW Development Bank on behalf of BMZ, will co-fund the implementation of the programme alongside the IDF insurance industry members.
The Mexican Ministry of Finance and Public Credit and the Ministry of Agriculture welcomed the development of this insurance scheme that will ensure pay-outs to farmers in a direct and swift manner. It will protect smallholder corn farmers against losses in cases of drought and uneven rainfall.
This programme also has other benefits including that these farmers will not only have ready access to finance, but they will also receive timely weather forecasts. While insurance offers peace of mind against risks, the project has a long-term focus that is to improve the livelihoods and build up the resilience of Mexico’s small holder farmers.
Ivo Menzinger, Industry Chair, IDF Sovereign & Humanitarian Working Group, said:
“I’m very pleased with how the Insurance Development Forum and its members have mobilised to develop and initiate the implementation of this new country project under the Tripartite Agreement.
A huge amount of thought has been put into developing a parametric insurance solution that simplifies the insurance process for these farmers, breaking down barriers to accessing insurance. As a result, this project concept has scope for further application in other countries.
Through the IDF Tripartite projects, the insurance industry is delivering on its responsibility to help developing countries vulnerable to climate change protect their hard-earned development gains, while using risk financing tools to increase their financial, physical, as well as social resilience.”
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