Liberty Mutual Reinsurance (LM Re) has launched a parametric insurance product to protect Colombian farmers against climate-related risks, in collaboration with XS Latam and SFA CEBAR.
The livestock-focused cover, developed with data partners Floodbase and EarthDaily, aims to reduce financial hardship caused by floods and droughts.
The product builds on LM Re’s earlier drought protection pilot and expands coverage to include flooding, using advanced flood mapping and satellite technology to trigger rapid payouts.
According to the firm, Colombia’s topographical diversity makes it particularly vulnerable to both drought and excessive rainfall, with recent years marked by destructive floods and some of the worst droughts in the country’s history.
Traditional satellite-based parametric products in the region have struggled due to persistent cloud cover, but LM Re says its new offering can provide daily index measurements to maintain data continuity and reliability.
The cover is designed to help farmers avoid the need to sell land to repay loans after weather-related losses and may also reduce lending risk for banks.
Jean-Christophe Garaix, head of agriculture and parametrics at LM Re, says: “With farmers in Colombia routinely relying on annual loans to farm their land, should adverse weather cause a herd loss, many must sell land to repay the loan.
“This product is designed to mitigate that risk, making farming much more resilient. It also simultaneously reduces the risk banks face in offering finance, creating the potential for cheaper loans, which will further help support resilient farming in Colombia.”
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