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For the United Nation’s World Food Programme (WFP), enabling access to Climate and Disaster Risk Financing and Insurance (CDRFI) solutions is central to fulfilling its mandate to achieve zero hunger through both saving and changing lives. WFP Nicaragua is leading the efforts in the Latin American and Caribbean region to implement a risk-layering insurance approach. A combination of financial instruments is being used to address hazards of varying intensities and frequencies as there is no “one-size-fits-all” formula for risk financing.

Despite the delays that the pandemic caused to the design and implementation of new products, three years after the launch of the first parametric insurance in Colombia, the Microinsurance Catastrophe Risk Organization (MiCRO) and its local partners have been able to provide almost 120,000 beneficiaries with increased protection against the impacts of hazards such as excess rain, drought and earthquakes. In 2019, MiCRO and SBS Seguros Colombia S.A. designed a microinsurance product for Small and Medium Enterprises (SMEs) in Colombia, which has since been offered to Bancamía’s clients and focuses on reaching the urban and rural poor.

Pastoralist communities, who rely on livestock for their livelihoods, are particularly vulnerable to extreme drought which is becoming more common due to climate change. Index-based Livestock Insurance (IBLI) has proven vital in these communities but has not appealed to women because in most cases men control the family’s livestock and the insurance payments for losses. Family Insurance is built on the technical foundation of IBLI but provides coverage in “family” units that pay for household needs during droughts that threaten families’ wellbeing.

Over the last couple of decades, Kenya has experienced an increase in famine frequency, rising from one famine between the 1960s and 1980s, to a famine almost every year since the mid-2000s. This is due the current state of climate emergency with impacts such as a sustained decline in precipitation levels, increase in intensity of storms, and the expansion of arid and semi-arid lands, all of which have contributed to a drop in rain-fed agriculture potential in the country. In light of this, the International Food Policy Research Institute (IFPRI) has joined forces with partner organizations to launch a pilot programme for a Risk-Contingent Credit (RCC) solution in order to address the exponential rise in climate risks and support resilience building within smallholder farmers in Kenya. RCC is a linked financial product that embeds insurance protection through loan coverage and the reduction of collateral during droughts.

The high exposure of Jamaica to natural and climate-related disasters is posing an increased risk to the country’s population as well as its macroeconomic and financial outlook. The Government of Jamaica is addressing this risk by implementing a disaster risk financing strategy that aims to improve the country’s financial resilience through prearranged financing instruments including a contingency fund, contingent credit and catastrophe insurance. Supported by the World Bank, GRiF and USAID, a catastrophe bond provides the Government of Jamaica with USD 185 million in storm protection for three years until December 2023. The country’s first-ever cat bond transaction complements the strategic financing instruments and reduces the country’s financing gap in a cost-efficient way.

While the Central Highlands in Vietnam are the largest production hub for coffee in the country and the largest Robusta coffee producer in the world, the region remains the second poorest region in the country. This makes it even more difficult for local smallholder farmers to build resilience against the increasing impacts of climate change. With the aim of reducing their vulnerability, the Alliance of Biodiversity International and CIAT together with partner organizations is piloting a Coffee Climate Protection Insurance (CCPI) scheme to enhance the capacity of smallholders and agribusinesses to cope with climate variability and change. The scheme incorporates the use of forecasts into agro-advisories, and an integrated index insurance approach for drought, excessive rainfall and temperature for coffee farmers to reduce risks and encourage good farm-management practices.

Increasing the resilience of smallholder farmers against flood events through index-based insurance in Nepal. Check out how a partnership headed by Practical Action and co-funded by the InsuResilience Solutions Fund (ISF) is developing an innovative index-based insurance approach for flood-prone communities in western Nepal.

Direct involvement of municipalities for effective disaster risk management in the Greater Accra Metropolitan Area, Ghana. Check out how GIZ develoPPP and Allianz Re together with local partners reach the households most affected by flooding through risk-transfer solutions for municipalities and their public assets.  

Piloting an innovative index to protect against both drought and excess rainfall One Acre Fund (OAF), a non-profit social enterprise that supplies financing and training to smallholder farmers, has partnered with Global Parametrics (GP), a specialist provider of climate risk protection. Together, they have pioneered the use of GP’s new Water Balance Index to protect OAF’s network of 70,000 smallholder farmers in Tanzania against drought and excess rainfall. This weather index solution facilitates quick financial response at affordable rates, promoting resilience amongst farmers struggling with a volatile climate.

Most farmers and micro entrepreneurs in El Salvador are exposed to different economic and weather-related shocks threating their livelihoods and food security. Still, they lack access to adecuate and affordable insurance products to protect their productive activities. WFP El Salvador is collaborating with local partners to bridge these gaps by piloting an innovative insurance solution that protects over 950 farmers and micro entrepreneurs (46% women) against business interruption ocurring due to excess rainfall, drought and earthquake.