Indonesia, one of the world’s largest producers of coffee and cocoa, has faced severe climate challenges in recent years. Frequent flooding, heavy storms, landslides, and droughts have disrupted the livelihoods of an estimated 2.3 million smallholder farming households reliant on these crops. Rising temperatures, erratic rainfall, prolonged dry spells and pest invasions have led to significant declines in crop yields, threatening both farmers’ economic security and the quality of their harvests.
To address these challenges, the InsuResilience Solutions Fund (ISF) is co-funding the development and implementation of index-based insurance products in collaboration with Blue Marble Microinsurance, a London-based InsurTech company, and PT Asuransi Jasa Indonesia (JASINDO), a state-owned insurance provider. The Ministry of Agriculture of Indonesia represents the demand side of the partnership.
The project aims to enhance the resilience of smallholder coffee and cocoa farmers to climate risks by introducing a new insurance solution that stabilises incomes and helps prevent households from falling back into poverty through tailored, data-driven coverage.
Designed using satellite data, the insurance products provide protection against drought and excess rainfall, tailored to the specific risks and harvest calendars of different regions. Farmers can choose between basic coverage or additional protection for specific phases of crop production, ensuring flexibility and relevance to their needs.
The product development process includes submission of the insurance designs for regulatory approval by the Indonesian Financial Services Authority (OJK) as well as the mobilisation of both local and international reinsurance capacity. At the national level, JASINDO will underwrite and manage the insurance products in line with Indonesia’s reinsurance requirements. Internationally, Blue Marble’s network of reinsurers, including Aspen, ASSA, MAPFRE, TransRe, and Zurich, will provide additional risk-sharing support.
The insurance products will be distributed through JASINDO with support from the Ministry of Agriculture and its provincial Dinas Pertanian offices. These offices have a proven track record in reaching farmer groups, having previously implemented the government’s rice and livestock insurance schemes. Payouts will be facilitated through two potential channels:
- Direct payouts to farmers via bank accounts, farmer cards (Kartu Tani), or group accounts.
- Integration with Kredit Usaha Rakyat (KUR) loans, the government-supported People’s Business Loan scheme for SMEs, whereby payouts are first used to service outstanding loans, with any remaining funds transferred to farmers’ bank accounts.
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