Insurance
Home›Insurance›Industry & Deals›EIB backs WFP parametric insurance to protect Ethiopia…
EIB backs WFP parametric insurance to protect Ethiopian farmers
The program targets about 210,000 smallholder farmers and uses a premium guarantee fund to support insurers and rural lenders during premium-payment defaults.
The European Investment Bank, through its development arm EIB Global, is issuing a grant of up to €4 million to the United Nations World Food Programme to develop and roll out parametric insurance products for smallholder farmers in Ethiopia, according to Artemis.
The scheme is designed to cover roughly 210,000 farmers with index-based microinsurance that pays out against crop and livestock losses tied to adverse weather conditions or natural disasters. WFP will develop and pilot the program in partnership with private insurance companies and intends to distribute products through rural finance institutions under Ethiopia’s Rural Financial Intermediation Programme (RUFIP III).
WFP will initially administer a Premium Guarantee Fund, which is intended to help address liquidity constraints and provide a guaranteed mechanism for financial institutions that purchase insurance on behalf of final beneficiaries if premium payments default. The funds are also meant to pre-finance insurance premiums as part of the effort to improve the scheme’s long-term sustainability, the outlet said.
The EIB said the initiative aims to de-risk agricultural portfolios held by rural finance institutions under RUFIP III and help beneficiaries manage climate-related shocks. The grant is also described as the EIB’s first climate-risk insurance project, and it will complement EIB Global’s €110 million credit line for the third phase of RUFIP III in Ethiopia.