Vietnam drought triggers payout to coffee farmers under Willis–Global Parametrics program

By Henry Gale

Feb 17 - (The Insurer) - A parametric insurance policy designed by Willis and Global Parametrics has paid claims to coffee farmers in Vietnam whose yields have been affected by drought in 2024.

The payouts were triggered by low rainfall levels during the critical flowering period for coffee plants.

The insurance program was developed in partnership with Bao Minh Insurance, coffee trading company ECOM Agroindustrial and Australia's University of Southern Queensland.

Willis, the corporate risk and broking arm of WTW, placed the parametric solution with Bao Minh Insurance in early 2024. The Natural Disaster Fund, a government-backed risk financing vehicle managed by Global Parametrics, provided risk capacity.

Laurent Bossolasco, sustainability manager at ECOM Agroindustrial said: “It is vital for the survival of our coffee industry that the weather, market and agricultural risks borne by farmers are shared by market participants. Changing rainfall patterns, droughts and higher temperatures are part of the farming equation and parametric insurance can be a meaningful tool for coffee producers to adapt to climate change.”

Claire Wilkinson, managing director for alternative risk transfer solutions at Willis, said: “This programme supports the resilience of coffee farmers in Vietnam against the impacts of an increasingly volatile climate, giving them much-needed financial support and allowing them to recover quickly when adverse weather threatens their livelihoods.”

Angus Kirk, chief executive of Global Parametrics, said: “Many of these farmers operate on a small scale with limited financial resources, which constrains their ability to cope with the impact of deviations in rainfall and temperature patterns on their crops. We look forward to continuing our work with our partners in Vietnam.”