The Insurance Development Forum (IDF), the United Nations Development Programme (UNDP), the German Government, and the government of Uzbekistan have launched a EUR 1.9 million project to develop and implement a sovereign risk transfer scheme consisting of a multi-peril indemnity insurance product to protect vulnerable farmers in Uzbekistan.
Agriculture plays a crucial role in Uzbekistan’s economy, accounting for approximately 35-40% of the national GDP. Among the agricultural sector, dehqan farmers – otherwise known as smallholder farmers – occupy 13% of the cultivated land, and contribute significantly (65%) to the gross agricultural output.
This heavy reliance on agriculture through smallholder farms makes the country highly susceptible to various weather risks, crop diseases and natural disasters. The insurance solution developed under the Tripartite Agreement is expected to initially benefit 16,910 farmers and their families by introducing an effective and inclusive scheme that grants smallholder farmers access to insurance and as such increases their resilience.
The project partners will develop an indemnity-based solution that will compensate based on the real crop loss, evaluated by loss adjusters that will be trained during the project. This approach facilitates direct interaction with farmers, fostering the development of local insurance markets and knowledge transfer regarding risks and crops. During the initial year of the project, the team will conduct a pilot of the insurance products in Fergana, Namangan and Andijan oblast. In the second year of implementation, the project plans to expand the coverage by including additional types of fruits and/or vegetables.
In order to enhance the ability of smallholder farmers to withstand the impacts of climate change, IDF Members Europa Re and Swiss Re are partnering with two local insurance companies, Uzagrosugurta and Semurg, to work together to develop an agriculture insurance product for Uzbek farmers.