Client Need: After experiencing significant fluctuations in corn yield, a large producer in Western Europe wants to cover the financial risk posed by a drop in yield jeopardizing its ability to meet key delivery contracts.
Pain Point: The climate-driven factors that lead to poor yield are diverse – excess of rainfall at a crucial moment for the seed germination, spring frost, repeated heat waves, droughts, etc. Taken together or individually, their effects are difficult to assess and insure independently.
Our solution: In close cooperation with the broker and the corn producer, Descartes designed a parametric yield protection fully adjusted to the client’s production schedule, revenue, and region. Our single yield protection covers the corn grower against the full spectrum of climate hazards impacting corn yield. Utilizing robust historical data on corn yield in combination with satellite imagery and advanced gridded weather models, we precisely model their risk to offer a more affordable solution than a peril-by-peril cover.
The Result: At the end of the harvest season, the parametric cover will leverage official, transparent data on yield, and compare the results to the parametric structure that has been tailor-made for the corn producer. If yield data falls below the predefined threshold, the producer will receive payment of the corresponding percent of the Sum Insured within a matter of days.