Insuring small farmers against climate change

A startup provides financial protection for farms at risk of extreme weather

Spotted: Between 1970 and 2021, extreme weather events were responsible for $4.3 trillion in economic losses, and because its productivity is so weather-dependent, agriculture is one of the most vulnerable industries when it comes to climate change. This is particularly the case for smallholders, who may lack the financial resources to bounce back from failed harvests caused by bad weather. Climate insurtech Ibisa wants that to change.

The startup, which is based in Luxembourg, is unlocking the agriculture micro-insurance market to ensure that small-scale farms around the world are protected in the event that extreme weather interferes with their productivity. In the onboarding phase, Ibisa examines the key weather risks for a given site depending on the local climate. The startup then assigns that farmer relevant ‘triggers’, which could entail a certain level of rainfall or extreme heat, and confirms the claim amount in advance.

If the trigger level is reached or exceeded, like when there has been too little or too much rain, Ibisia analyses the satellite data and a claim is automatically filed without the insured needing to fill out any paperwork. Payment should be made within 10 days of the weather event, which is faster than traditional insurance offerings. And because there are fewer administrative costs to cover, it’s also more affordable.

The company offers a range of products, including insurance to cover excess or too little rainfall, cyclones, typhoons, and extreme heat – which was specifically designed for dairy farmers who will experience much lower milk yields in hot temperatures, with a focus on India.

Ibisa already operates across four continents, with projects in the Philippines, India, New Zealand, Guatemala, and West Africa. In June this year, the startup closed a $3 million funding round led by the Acumen Resilient Agriculture Fund and Equator. With the latest financing, Ibisa plans to expand its product offering and grow into key emerging markets.

Written By: Matilda Cox