Climate Risk Insurance Gets a Major Boost in Bangladesh
Bangladesh’s smallholders face huge weather risks. A new international partnership aims to provide suitable insurance. This should greatly increase farmers’ resilience to climate change.
(Frankfurt, Basel, Dhaka, June 30th)
Bangladesh is one of the world’s countries likely to be most affected by climate change. As Cyclone Amphan recently demonstrated, the country’s subtropical monsoon climate leaves it highly susceptible to natural disasters. Food security depends heavily on over 12 million smallholder farmers. They are particularly vulnerable to extreme weather events. Most of the smallholders practice rain-fed agriculture, and thus face the risks of drought, excess rainfall and flooding. Despite this vulnerability, however, agricultural insurance in Bangladesh is still in its infancy.
A new partnership aims to address this challenge. The Frankfurt School of Finance and Management (FS), as implementing agency of the InsuResilience Solutions Fund (ISF*), today signed a grant funding agreement with the Syngenta Foundation for Sustainable Agriculture (SFSA) and further organizations. “This partnership aims to improve smallholders’ resilience to climate change by providing suitable insurance products”, says Annette Detken, Director of the ISF. “Our grant will co-fund the development and scale-up of climate risk insurance for a range of crops, that is tailored to meet smallholders’ needs.” With help of the Swiss digital platform developer EnvEve S.A., the partners are also developing a software platform to support product development, pricing and distribution. The Swiss Agency for Development and Co-operation (SDC) financially supports the project within its Surokkha initiative on insurance solutions in Bangladesh.
In Bangladesh, getting insurance into farmers’ hands will be in collaboration with local partners. BRAC, the world’s largest NGO and microfinance institution, and Green Delta Insurance Company Ltd (GDIC), the largest non-life insurance company and the only agricultural and livestock insurance provider of Bangladesh, will distribute the insurance products in at least nine districts. They will also provide training and advice. “This partnership will encourage innovation, scale promising solutions and strengthen the use of agriculture insurance in building resilience among smallholder farmers.”, says Tanvir Rahman Dhaly, Head of BRAC Microfinance Programme. “I believe that this partnership will mark a historical moment for the insurance sector of Bangladesh.”, explains Farzanah Chowdhury, Managing Director & CEO, GDIC. “It will enable GDIC and ISF contribute in ensuring the country’s food security by addressing the impact of climate change.”
“Creating a better world requires teamwork, partnerships, and collaboration. If agriculture goes wrong, little else will have a chance to go right. So how do we boost and promote agricultural productivity and achieve global food security while at the same time managing climate change?”, asks Olga Speckhardt, Head of Global Insurance Solutions at the Syngenta Foundation. “Part of the answer lies in partnerships both public and private.”
Internationally, the 2-year initiative will also draw on the skills of the International Research Institute for Climate and Society (IRI) at Columbia University, New York, and Reading University’s Walker Institute in the UK. Their role will be to document the process of product development and to build local skilled resources for scaling up agriculture insurance in the long term.
*The ISF was set up and is funded by KfW on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). It is a key delivery channel for the InsuResilience Global Partnership, a joint initiative by the G20 and V20 countries to reduce vulnerability. The ISF supports innovative insurance solutions to mitigate negative impacts of climate change. It offers co-funding and advice for the implementation of new climate risk insurance concepts into marketable products and to expand sustainable existing products. On the condition that applicants commit to providing half the requested funding, ISF offers grants of up to €2.5m.
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