Liberty Mutual Re backs Kenyan parametric
Liberty Mutual Reinsurance (LM Re), part of Liberty Mutual Insurance Group, has announced a partnership with insurtech firm Sprout and financial services firm Britam as the local underwriter launched a new parametric insurance product designed to protect Kenyan coffee growers from financial losses caused by drought.
The newly launched product, which stems from collaborative efforts at the Lloyd’s Lab Launchpad Pitch, provides swift payouts triggered by specific weather events, offering immediate financial support to mitigate the risks of crop failures, explained LM Re.
Sprout, leveraging its expertise in technology-driven insurance solutions in the agricultural sector, uses satellite data and machine learning to assess historical weather patterns, empowering farmers to maintain productivity despite climate challenges.
LM Re has supported the solution since its inception, through shaping the structure of the coverage and the capacity allocation.
The product is designed not only to protect against climate risks but also to address the specific needs of coffee growers, incorporating real-time advisory services to assist farmers in adapting their farming practices based on weather forecasts, thereby enhancing their resilience, said the partners in a statement.
The innovative scheme, in which coverage premium is funded by global coffee buyers, supports local operations while minimising costs for Kenyan farmers.
“This approach ensures that farmers can quickly recover from adverse conditions, maintaining their livelihoods. By keeping financial resources within Kenya and supporting local agriculture, the new insurance product aims to bolster the local economy and promote sustainable farming practices, offering a crucial safety net for farmers facing increasing climate variability,” they said.
The product launches with the support of Kenyan insurer Britam, aligning with regulatory and industry efforts to close the insurance gap and provide more comprehensive coverage options for local farmers, they added.
Jean-Christophe Garaix, head of agriculture and parametrics at Liberty Mutual Re, said: “This launch is testament to our commitment to providing innovative insurance solutions that empower local communities in emerging markets to be more climate resilient. Partnering with Sprout allows us to combine our reinsurance expertise with their deep understanding of agricultural needs, resulting in a product that offers tangible benefits to Kenyan farmers and provides a stabilising effect for the local economy.”
Ashley King-Bischof, CEO of Sprout, added: “This coffee product is a catalyst to unlock production potential and climate financing options for smallholder farmers in Kenya. Partnering with LM Re allows us to deliver a robust product and support farmers when they need it most.”
Tom Gitogo, managing director and CEO of Britam Group, said: “As part of our sustainability strategy, we aim to champion innovative microinsurance solutions that not only safeguard vulnerable populations, such as small-scale farmers, from climate risks but also deepen financial inclusion among the low-income population. These emerging risks are underserved in the market and to address this gap, Britam partners with local and global organisations to develop innovative solutions.”
