Addressing Drought Risk in North America
Drought risk in the United States is widespread, severe, and intensifying under climate change. Much of the West experienced drought conditions at both the beginning and end of 2025. Between late 2020 and early 2023, more than 40% of the contiguous U.S. experienced drought at any given time, peaking at 83% in October 2022.
Farmers nationwide, particularly in eastern and southern regions, face declining crop yields and increasing water stress from severe droughts. As climate volatility worsens, producers struggle to find innovative risk solutions that accurately reflect exposure while providing stable and affordable insurance coverage.
Our Parametric Approach to Drought Exposure
Descartes’ parametric drought insurance offers critical capacity by:
- Designing bespoke payout structures using in-house algorithms, IoT inputs, and climate models based on gridded satellite data to define clear, objective drought and precipitation triggers
- Providing flexible, location-specific coverage calibrated for single farms, cooperatives, or complex global agricultural supply chains
- Protecting against financial impacts of water scarcity, drought, and lack of precipitation, supporting balance sheet stability during adverse growing seasons
- Delivering rapid, transparent payouts based on pre-agreed parameters, eliminating the need for traditional loss adjustment
Our parametric approach uses a combination of precipitation or soil moisture deficit datasets, enabling us to provide an unparalleled assessment of drought risk.
Parametric Cover in 4 Steps
Assess
We assess and evaluate the client's risk of drought, leveraging precipitation or soil moisture deficit datasets.
Customize
Design a customized index cover, fit to the client’s needs, in which payout structures are indexed according to soil moisture or precipitation levels.
Monitor
Upon policy inception, we monitor the insured's location for precipitation and soil moisture to determine whether a qualifying drought has occurred.
Payout
Insured client receives a payout within days of the concluded coverage period, covering financial losses and boosting liquidity ahead of next season.
Who Should Consider This?
Descartes’ parametric drought insurance is designed for clients exposed to drought and water stress, such as agribusinesses, agri-producer cooperatives, food & beverage suppliers, and public sector entities. Coverage goes beyond physical crop losses to address broader financial impacts such as reduced yields, supply chain disruption, revenue shortfalls, increased input costs, and operational strain caused by prolonged water scarcity and lack of precipitation.
Capacity
Up to $80M per contract
Benefits Powered by Parametric Drought Insurance
Our parametric drought insurance strengthens resilience by:
- Covering the full spectrum of economic losses caused by drought, water scarcity, and lack of precipitation
- Protecting against both direct production impacts and non-damage financial losses across agricultural operations and supply chains
- Delivering data-driven, advanced parametric payouts to support rapid recovery, balance sheet protection, and operational continuity
Innovative Parametric Drought Solutions for Brokers
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.
Contact Us
Whether you're quoting a complex risk, looking to break into new markets, or just curious about parametric insurance, our team is here to help you win. Reach out and we will get back to you within 48 hours.
