Parametric Drought Insurance

Mitigating drought risk has become increasingly crucial as climate volatility heightens the likelihood of drought conditions. Parametric insurance provides innovative solutions for the agriculture industry with robust balance sheet protection and swift payouts.

Addressing the drought risk

Drought ranks as one of the most prevalent and costliest natural hazards, with the agricultural sector experiencing most of the impact—accounting for 65 percent of drought-induced losses. Farmers across the globe are impacted by severe droughts that cause drops in crop production and strain on water levels globally.

Especially due to the worsening climatic situation, farmers struggle to find innovative solutions that accurately assess their risk and offer stable, affordable insurance coverage. 

Descartes’ parametric insurance addresses this need by offering advanced balance sheet protection against water scarcity, drought, and lack of precipitation. Using in-house algorithms, IoT and climate models derived from gridded satellite data, we provide large agribusinesses, agri-producer cooperatives, the public sector as well as food & beverage suppliers with bespoke, first-in-class parametric coverage against drought worldwide. 

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farming land affected by drought
Step 1


We assess and evaluate the client's risk of drought, leveraging precipitation or soil moisture deficit datasets.

Step 2


Design a customized index cover, fit to the client’s needs, in which payout structures are indexed according to soil moisture or precipitation levels.

Step 3


Upon policy inception, we monitor the insured's location for precipitation and soil moisture to determine whether a qualifying drought has occurred.

Step 4


Insured client receives a payout within days of the concluded coverage period, covering financial losses and boosting liquidity ahead of next season.

Our case studies are all over the world

Utilizing Machine Learning and real-time monitoring from satellite imagery & IoT, our state-of-the-art technology helps businesses bounce back faster against climate, cyber and other emerging risks.

  • Global Agriculture Drought Water Scarcity & Drought Insurance for the Agriculture Sector See the case study

Our parametric approach to drought risk

Our parametric approach uses a combination of precipitation or soil moisture deficit datasets, enabling us to provide an unparalleled assessment of drought risk.

In full collaboration with the broker and client, we design a customized parametric cover based on publicly available third-party data sources from reputable international research institutes. After assessing the risk profile and historical loss data from the client, we deliver our quotation based on the most suitable methodology. Through our expertise, we can propose either a cover based on lack of rainfall over a critical period or a reduction in the soil water content. With each proposal, we provide a backtest, allowing the client to assess their potential payouts if they had opted for our parametric model years prior.

Our product unlocks coverage for agribusinesses as well as agricultural suppliers all around the world, helping them to remain financially resilient and stable in years of drought.

crops impacted by drought


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