Malawian farmers receive drought insurance payout in innovative structure developed by Global Parametrics
Parametric drought product developed by Global Parametrics, a CelsiusPro Group company
Premium subsidy provided by Humanity Insured
Catalytic grant and risk capacity provided by Natural Disaster Fund
LONDON, 7 February 2025.- Smallholder farmers in Malawi will benefit from an insurance payout to Tearfund of USD 100,000 (approximately £80,000). This payout is the result of an innovative parametric product, which leverages satellite data to determine the availability of water for crops.
When the level of soil moisture falls below a pre-agreed threshold in a defined timeframe, the payout is triggered without the need for loss estimations. This provides fast, transparent and reliable financial relief for farmers who would otherwise see their yields at risk, threatening communities with extreme hunger. The payout helps farmers proactively take measures that improve food security for their communities.
Elizabeth Myendo, Tearfund’s Regional Lead for Southern and Eastern Africa, said: “We are preventing a hunger crisis before it takes hold. This insurance payout will preemptively support 1,200 households with drought tolerant crops (such as sweet potato vines and cowpeas) and high value horticultural crops (such as tomatoes, aubergines and onions). It is a key tool in tackling malnutrition.”
In a bold new move to protect communities who are vulnerable to extreme weather events fuelled by climate change, this new, previously untapped source of financing promises to reduce the impact, scale and the cost of humanitarian crises. It comes in the form of an innovative risk transfer product, developed by Global Parametrics (a CelsiusPro Group company) and funded through a premium subsidy from Humanity Insured, a UK registered charity backed by the insurance sector.
The way the payout will be spent and choice of seedlings to invest in has been agreed inline with the Malawian Ministry of Agriculture recommendations and in consultation with Tearfund’s partner organisation, Eagles, as well as agricultural experts who monitor market value to help farmers make smart choices about what to grow to both feed their families and earn a living.
“If the rains had not come at all, the insurance package could have also been positioned to provide emergency food supplies to help families through a period of extreme hunger,” explains Myendo. “Teaming up with Global Parametrics and Humanity Insured enables us to ensure that the long term work we are doing in partnership with local churches and communities around the world, helping people adapt to the effects of climate change, is better protected. The flexibility and varying levels of support the product offers means the people we work with will be more resilient to setbacks caused by extreme and unpredictable weather events.
“Tearfund, Global Parametrics and Humanity Insured, have together built this solution that will also be used in Nepal, Pakistan and Ethiopia as well as Malawi, focusing on protecting low income families vulnerable to severe drought. We hope to go on to protect communities against excess rainfall, tropical storms, heatwaves and other types of disaster too.”
Tearfund’s Country Director for Pakistan, Jonathan Johnson, said: “It’s clear that the gap between the cost of global disasters and the finance available to respond to their impact is growing. People cannot depend on traditional models of aid, which can be slow to flow through to those at the sharp end when extreme weather events take hold. People at risk of extreme drought and famine must have fair access to insurance.”
The risk capacity is provided by the Natural Disaster Fund (NDF) a disaster risk financing vehicle managed by Global Parametrics and funded by the UK government’s Foreign, Commonwealth and Development Office and by Germany’s development bank KfW on behalf of the German Ministry for Economic Cooperation and Development (BMZ). The product is developed with a catalytic grant provided by the NDF Technical Assistance Facility, funded by KfW on behalf of BMZ.
Mark Rüegg, CEO of CelsiusPro Group said: “We are delighted with our partnership with Tearfund and Humanity Insured on this drought solution to support the resilience of smallholder farmers. This collaboration between the humanitarian, development and insurance sectors accelerates climate resilience and food security.”
Charlie Langdale, CEO of Humanity Insured, commented: “This exciting new partnership with Tearfund is delivering critical services that help shield vulnerable communities from disasters. This innovative insurance solution not only protects families from the immediate impacts of drought but strengthens their long-term resilience, by restoring certainty and financing recovery.”
“Using satellite triggered insurance, money reaches those in need quickly, preventing disasters from becoming crises, and allowing people to manage climate shocks. With this safety net in place, we create a virtuous cycle of prosperity, allowing families to focus on their future—investing in everything from education to climate-resilient farming practices.”
This new insurance-based solution is just one of the ways that Tearfund is collaborating with the insurance industry to harness new technologies and digital tools to the benefit of the world’s most climate vulnerable communities. Tearfund is also working with partners in Ethiopia to develop new digital technologies to support farmers in remote locations.
“Our aim is to disseminate early warnings of extreme weather events and offer practical advice, sent via voice notes in local languages, on how to protect livelihoods. We are also trialling a specially designed mobile app that will link small-scale farmers to parametric insurance packages to protect themselves and their communities against major losses in the event of extended droughts. Ultimately, there cannot be climate justice without fair, affordable and accessible insurance for the most vulnerable,” said Elizabeth Myendo.
###
Media contact:
Daniel Perez-Whitaker
Head of Marketing & Communications
daniel.perezwhitaker@celsiuspro.com
Global Parametrics, a company of the CelsiusPro Group, focuses on developing parametric risk transfer solutions that create a positive impact for vulnerable communities in countries prone to extreme weather and natural catastrophe risks. The company mobilizes risk capacity to underwrite parametric risk transfer through dedicated structures, which are backed by reinsurers with AA-ratings. The Global Parametrics team manages the Natural Disaster Fund (NDF), a public-private partnership with capital committed by the UK government's Foreign, Commonwealth and Development Office, and Germany's development bank KfW on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). globalparametrics.com/
CelsiusPro Group is dedicated to helping both private and public organisations understand and mitigate the financial impact of climate and NatCat risks. Our Insurtech platform integrates climate data and risk modelling to develop advanced solutions that enable insurance companies and brokers to distribute and manage tailored parametric insurance. Through our consulting services, we provide end-to-end insights on physical climate risk assessment, disaster risk finance, and structuring and risk modelling for insurance schemes. Our subsidiary, Global Parametrics, seeks to mobilise and deploy risk transfer capacity through various financial instruments and vehicles. With these integrated efforts, CelsiusPro Group advances parametric risk transfer from the fringes to centre stage in climate and NatCat protection. celsiuspro.com
The Natural Disaster Fund (NDF), launched in January 2018, is a blended risk transfer vehicle designed to mitigate the challenges in climate and natural catastrophes (NatCat) resilience for low-and-middle-income countries. Global Parametrics Limited also manages the NDF’s Technical Assistance Facility, a grant funding facility funded by BMZ which is designed to strengthen the availability of impactful risk transfer solutions in countries eligible for official development assistance (ODA). naturaldisasterfund.com/
Tearfund is a Christian charity that partners with churches in more than 50 of the world’s poorest countries. We tackle poverty through sustainable development, responding to disasters and challenging injustice. We believe an end to extreme poverty is possible. Tearfund is also a member of the Disasters Emergency Committee. tearfund.org.
Humanity Insured, set up with the backing of the insurance industry, is a registered charity in the UK (Charity Number:1209214), and are registered not-for-profit non-stock entity in the US. Humanity Insured uses private and philanthropic capital at scale to help people on the climate crisis frontline access and pay for new forms of insurance. It is making insurance accessible and effective for vulnerable communities, empowering them to build climate resilience through financial resilience, and helping them protect their futures. humanityinsured.org