Climate volatility increases the risk of drought exposure. The financial burden of drought on the agricultural industry is particularly challenging due to severe underinsurance. With swift, guaranteed payout following a triggering drought event, parametric insurance has emerged as a leading source of fresh capacity, rapid liquidity and client-customized cover for the industry. With quick, transparent claims indemnification, it offers a great solution to concerned crop growers, agribusinesses, and cooperatives.
Key benefits
Constant monitoring and swift payouts help clients bounce back and prepare for the next season
Each structure is tailor-made to a client’s specific needs, risk appetite and budget
Covers can be customized depending on planting seasonality and vegetational life-cycles, such as during the flowering or sowing seasons: critical times for crops to come to fruition
case study example
Case study
A corn producer faced insufficient drought coverage in the traditional market following the 2022 drought. Left with significant exposure, they experienced EUR 1.7 million in damages.
Problem
The drought occurred while the corn was at a critical stage, impacting both flowering and grainfilling periods, resulting in reduced yields. Recent droughts in Romania led to cautious underwriting by traditional insurers and higher premiums, increasing financial pressure on the client.
Solution
The corn producer chose a parametric cover for the next season, providing financial security against climate volatility, with a customizable risk period and tailored policy structure.
Descartes’ parametric policy triggers a payout based on specific weather parameters, ensuring immediate financial relief when a drought threatens crops. There is no need for claim assessment: if the rainfall drops below the agreed threshold, the policy pays out.
The client would receive EUR 1.7M
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