AXA and GIIF launch the first agricultural parametric insurance programme in Cameroon
AXA Cameroon and AXA Climate in collaboration with the World Bank Group’s Global Index Insurance Facility and ACTIVA Assurance have launched an innovative project to insure tens of thousands of Cameroonian farmers against climate risks.
AXA Cameroon and AXA Climate in collaboration with the World Bank Group’s Global Index Insurance Facility (GIIF) and ACTIVA Assurance have launched an innovative project to insure tens of thousands of Cameroonian farmers against climate risks.
The Cameroon Ministry of Agriculture and Rural Development formally launched the two-year pilot programme on 2 August. For 2019, the scheme will provide parametric insurance to protect the revenue of nearly 8000 cotton growers in Northern Cameroon in case of low crop yield due to drought.
AXA Cameroon has driven the project on the ground, providing insurance capacity as well as capacity building and training on parametric insurance to all local partners which include the country’s cotton association, the National Confederation of Cameroon Cotton Producers (CNPCC) and Sodecoton. AXA Climate, AXA’s centre of expertise for parametric climate risk insurance, provided technical and risk modelling support as well as knowledge on climate and new data technologies and reinsurance capacity for the programme.
Parametric insurance pays out based on objective and transparent indices such as cumulative rainfall, temperature, wind speed and others. Payouts are triggered as soon as the index reaches an agreed-upon threshold. This means that no costly farm visits to assess the losses are required and payouts can quickly reach impacted farmers. For the pilot programme in Cameroon, payouts are based on satellite data that measure drought levels in the covered areas.
“This innovative collaboration is directly aligned to our mission to provide immediate protection for communities against climate risks. Parametric insurance is instrumental in supporting growth of risk transfer solutions across emerging countries,” said Antoine Denoix, CEO of AXA Climate.
The project contributes to improving the productivity of the agricultural sector that remains vulnerable to climate hazards. This is particularly the case for the Cameroonian economy as agriculture contributes to 20% of the country’s gross domestic product and employs 54% of its working population.
“The launch of this new insurance product addresses the challenges of weather risks for a very vulnerable sector of the Cameroon economy. Now the insured farmers know that their income will be protected from production shortfall no matter the weather,” added Thierry Kepeden, CEO of AXA Cameroon.
AXA Climate has a strong focus on Public-Private Partnerships in Africa, having set up a similar parametric drought programme in Senegal with the national agriculture insurer and developing parametric insurance in Cote d’Ivoire. AXA Climate also reinsures the sovereign risk pool, the African Risk Capacity and the World Food Programme’s R4 Resilience initiative.
“The programme in Cameroon strengthens the strategic partnership between AXA and the World Bank Group’s GIIF which was signed in 2015 to develop parametric insurance in emerging countries, notably in Africa, Asia and Latin America”, as highlighted by Marieme BA, in charge of the development of the inclusive insurance programs for AXA in the CIMA countries. “The aim is to expand this experience to other crops such as maize, sorghum and livestock, pursuing to create synergies with all the agriculture value chain stakeholders to build resilience for farmers”.
Written by AXA Climate