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In the northern belt of India, renowned for its prized mango varieties such as Chausa, Dussehri, and Langra, farmers are grappling with unprecedented climate challenges. This "Mango Belt," which accounts for 40% of India's total mango production, recently experienced an early summer with temperatures soaring to 43 degrees Celsius. This has eventually disrupted the flowering cycle, significantly impacting overall production.
Similarly, mango production in Mal-Malihabad bordering the Sitapur area suffered a 35% decline, with other districts in Uttar Pradesh experiencing a 20-25% reduction due to unseasonal rainfall and hail storms in March and April 2024. With climate fluctuations expected to continue, farmers and agri-stakeholders are increasingly turning to insurance to mitigate financial losses caused by climate change-induced events.
With agriculture insurance sector is poised to grow 2.5% in average real premium from 2024 onwards, it becomes even more important for insurance companies to evolve its existing methodologies to map different sectors across agriculture, procurement and supply chain; to varying climatic disasters and produce insurance products that are smart, quick and cost effective and can be developed at faster timelines.
Recognizing these emerging trends in requirements and the urgent need for innovative solutions, we embarked on a mission to identify and invest in cutting-edge companies that can effectively solve the problem of developing insurance products with those that provide smaller-sized insurance products. Luxembourg-based IBISA’s technology offers a significant advantage in solving insurance challenges for small ticket sizes. By leveraging advanced satellite data and AI-driven analytics, IBISA can provide precise and reliable parametric insurance solutions tailored to the specific needs of smallholder farmers, agri-businesses and other associated sectors.
Additionally, IBISA's technology, which utilizes satellite data and AI-driven analytics, also benefits the renewable energy sector like solar, wind – which are highly dependent on varying weather conditions – by providing accurate risk mitigation, offering parametric insurance solutions, and enhancing investment confidence. It optimizes resource management in renewable projects and supports climate resilience planning, making renewable energy investments more attractive, efficient, and sustainable.
This innovative approach allows for quick and accurate assessment of risks and damages, reducing the administrative costs and complexities typically associated with traditional insurance models. Consequently, IBISA can offer affordable, scalable, and efficient insurance products, ensuring that even the smallest assets can be protected against climate-induced disruptions. IBISA reinforces our thesis where we believe that new data streams and technology interventions give rise to effective products that can unlock previously underappreciated markets.
IBISA’s Story with Parametric Insurance
While the market opportunity is evident, it is crucial to calibrate the risks and impacts of various climate events on different aspects of the agricultural economy. This ensures the development of parametric insurance products that effectively support the ecosystem at all levels.
Our partnership with IBISA was motivated by their innovative use of satellite technology to design and operate parametric insurance products that promote financial resilience and sustainable development. The core team comes with credible expertise in deeptech technology and actuarial experience. Since 2020, IBISA has been building a portfolio of climate-smart parametric insurance products focused on agriculture, finance institutions, clean energy generation and other allied businesses, enabling them to mitigate the impact of extreme climate events.
Starting with their flood and excess rainfall product, IBISA currently operates in India, the Philippines, Kenya, Ghana, Senegal, and plans to expand to Pakistan and Bangladesh. With a strong emphasis on technology and a deep understanding of global climate datasets, IBISA has expanded its product portfolio to include coverage for floods, droughts, multi-category risks for agri-farmers, heat index products for dairy farmers and the livestock sector, credit insurance for climate-vulnerable micro-finance institutions, and rental insurance for agri-warehousing companies.
IBISA has also forged extensive partnerships with insurers (ICICI Lombard, CLIMBS, QIC, Future Generali, HDFC Ergo, AIC), reinsurers (Global Parametrics, Munich Re, Swiss Re), distribution partners (dairy organizations, agri cooperatives, agritech startups such as Stellapps, DeHaat, Farmerline), and government agencies (CNAAS in Senegal, CLIMBS in the Philippines, PMFBY in India).
Building in India to Go Global
IBISA has placed special emphasis on India since establishing a local presence in 2023. Today, the company partners with PMFBY, the country's largest yield-based crop insurance program, and is developing a multi-category parametric insurance product for various crops.
Having understood the adverse impact of India’s extreme heat waves on livestock and poultry industries, IBISA has developed a heat based parametric insurance product that aims to address the challenges faced by the farmers and stakeholders of these industries. Since its introduction in 2023, IBISA’s Heat Stress Solution has already safeguarded over 140,000 livestock, spanning 14 districts in Kerala, in select districts of Maharashtra, Uttar Pradesh, Madhya Pradesh, Rajasthan, and Gujarat.
“Our strategic investment in IBISA underscores our commitment to supporting innovations that address critical societal challenges. By leveraging IBISA's expertise in technology-backed parametric insurance, we aim to empower farmers, enhance agricultural resilience, and drive sustainable growth in the sector.”
Additionally, a report by the Forum of Enterprises for Equitable Development (FEED) and the Development Intelligence Unit (DIU) also highlights that climate change-induced extreme weather events have impacted over 60% of marginal farmers in the last five years, resulting in significant crop and yield losses.
The enormous opportunity within the parametric insurance market spans far beyond agriculture alone. Rapid advancement in technology and data collection mean that the parametric value proposition is “becoming ever more compelling” as monitoring and measurement of the natural world becomes ever more precise; and solutions offered by those like IBISA are becoming increasingly critical in the $30B parametric insurance market and the larger $300B climate insurance market. From renewable energy to finance, travel & tourism, agriculture to infrastructure, the applications of parametric insurance in the climate insurance space are vast and varied.
We are confident that by pioneering their products, IBISA is not only transforming the way risks are managed across sectors but also unlocking new avenues for growth and market expansion. We are excited to be part of this journey, as we tap into the immense potential of the climate insurance market and drive impactful change on a global scale.
