Agriculture Insurance Scheme for Horticulture and Vegetables in Uzbekistan

Farms in Uzbekistan and in particular Dehqan farmers, remain vulnerable and are severely affected by climate change. To protect these farmers from climate-related hazards, the InsuResilience Solutions Fund (ISF) is co-funding the development and implementation of a multi-peril indemnity insurance product for horticulture and vegetables in Uzbekistan. The insurance solution is being developed by members of the Insurance Development Forum (IDF), working closely with local insurers, UNDP and the government of Uzbekistan.

Agriculture plays a crucial role in Uzbekistan’s economy, accounting for approximately 35-40% of the national GDP. This heavy reliance on agriculture makes the country highly susceptible to climate risks and natural disasters. Among the agricultural sector, Dehqan farmers, who occupy 13% of the cultivated land, contribute significantly (65%) to the gross agricultural output. Due to the size of their farms and the agriculture policies of Uzbekistan, most of those farmers are focusing in the horticulture sector. These farmers remain highly vulnerable to climate risks, which further negatively impacts their productivity.

In order to enhance the ability of horticulture farmers to withstand the impacts of climate change, two members of IDF, Europa Re and Swiss Re, and two local insurance companies, Uzagrosugurta and Semurg, are working to develop an agriculture insurance product for Uzbek farmers. The Ministry of Agriculture will closely collaborate in the project, and it will be supported by the UNDP country office. The ISF co-funds the project implementation and thereby helps to accelerate growth and enable the potential extension throughout the country. The Ministry of Agriculture has a keen interest in introducing a more effective and inclusive scheme that grants all farmers in the horticulture and vegetable sector access to insurance and, thus, increase their resilience to climate change. This marks a public-private partnership project under the Tripartite Agreement between the German government, IDF and UNDP to support risk-management solutions for climate-vulnerable countries.

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 following year, the project plans to expand the coverage by including additional types of fruits and/or vegetables.
An indemnity-based solution 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.

Nadica Jovanovska Boshkovska, Chief Project Officer at Europa RE, said:

Europa RE is privileged to work alongside the Uzbekistan Government and our local partners Uzagrosugurta and Semurg under the tripartite agreement programme (IDF/ISF/UNDP), which will ensure more stable livelihoods for small farmers in Uzbekistan.

Esther Baur, Head Europe at Swiss Re Public Sector Solutions, said:

Swiss Re is delighted to be playing a key role in the IDF/ISF/UNDP public-private insurance programme to protect climate-vulnerable horticulture farmers in Uzbekistan.

Eugen Doce, Co-head of the InsuResilience Solutions Fund, said:

ISF anticipates that the insurance against climate risk will support farmers to lower the risks in the horticulture and grow investments into this sector, hence stabilise and grow their income and contribute to the development of the agriculture sector in general in line with the development goals of the country.