Insurance market development – Paraguay

Agriculture is a key sector of the Paraguayan economy, representing 30% of the gross domestic product, 40% of exports and employing a great majority of the population. Given the importance of this sector, agriculture risks are key to the economic and social health of Paraguay. Especially increasing climate risks, such as the 2011 drought, have a significant impact on the vulnerable rural population. Family farmers and their households, representing 90% of the total farms, are the ones most at risk of being trapped or falling into poverty due to external shocks and to the lack of adequate protection mechanisms.

In cooperation with a Paraguayan Microfinance Institution (MFI), the project aims at developing an innovative weather index insurance product based on satellite data covering extreme events such as drought or excess rainfall. The product will be linked to the credits offered to the rural clients of the MFI, with a focus on the maize and soya producers in the portfolio. The MFI has a broad distribution network with branches spread through Eastern Paraguay. Currently the model is being developed in cooperation with national institutions and private actors, with the aim of launching the product for the credit renewal period in autumn 2017 in a few selected departamentos, before possibly extending to other crops and/or departamentos in the following years.

For more information, please contact Robert Fischle (robert.fischle@giz.de)