Colombia is one of South America’s most climate-vulnerable countries, experiencing a high recurrence of extreme weather events that threaten livelihoods nationwide. While all Colombians are impacted by climate change, rural populations are particularly at risk due to their dependence on agricultural activities and the concentration of poverty in these areas. To address these vulnerabilities, the InsuResilience Solutions Fund (ISF) will support a consortium consisting of Raincoat, an InsurTech company based in Puerto Rico; Cardif Colombia Seguros Generales S.A., a local insurance provider; and Munich Re, a global reinsurance company. Agriculture Bank of Colombia (BAC) represents the demand side and acts as distribution partner. This collaboration aims to scale-up and improve an index-based multi-peril insurance solution designed to protect farmers against the financial impacts of climate-related events, while also fostering education and economic opportunities.
In 2022, Cardif Colombia, Raincoat and Munich Re launched a pilot through the BAC. The coverage is bundled to agricultural loans for main crops and protects farmers against drought, excess rainfall, and floods -the main risks faced by Colombia’s agricultural sector. Farmers purchasing this insurance can have their credit repayment instalments covered in case of a loss, with any surplus paid directly to the farmer.
Building on the success in the pilot phase, the partners are developing an enhanced second version of the product. This iteration will incorporate improved risk modelling, potentially include additional coverages, and leverage insights gained during the first year of implementation.
The insurance solution is offered as an optional loan-linked product by BAC. Farmers who take out loans can add the insurance to safeguard their repayments against climate-related losses and to enact the use of CSA practices, promoting both financial security and agricultural resilience. This direct interaction provides an opportunity to educate farmers about the benefits of climate insurance, paving the way for broader adoption.
To further support this effort, Raincoat is developing an educational portal that will provide accessible resources to farmers and other stakeholders. Available as an online platform or mobile app, this tool will include user-friendly product descriptions, historical performance data, and climate-smart alerts and recommendations for sustainable agricultural practices. BAC loan officers will integrate the platform into the loan process, ensuring farmers can make informed decisions.
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