Parametric InsurTech Skyline Partners has partnered with Howden and global reinsurer Munich Re to develop a parametric insurance solution designed to protect farmers in Jamaica from extreme weather events.
According to Skyline Partners, farming is the main the source of income for around 18% of the Jamaican population, adverse weather events can have an extremely detrimental impact on livelihoods. The company added that the Caribbean has low insurance penetration rates and is experiencing increasingly frequent and severe weather events, which tests the region financial systems.
In an effort to alleviate the issue, Howden, Skyline and Munich Re have developed a new parametric product that protects the Jamaican Co-operative Credit Union League (JCCUL) against non-repayment of micro-loans from farmers in the event of extreme weather.
JCCUL is used for loans by a significant 100,000 smallholder farmers in the country and is leveraged to pay for essentials, such as seeds, day-old chicks, and farming equipment. However, adverse weather events could mean that farmers are unable to repay their loans, which in turn puts JCCUL ability to continue to offer vital financial support at risk.
Specifically, the parametric insurance solution will replace lost funds as a result of farmers defaulting on their loans in the event of an extreme hurricane.
Skyline recently gained $1.75m in funding from West Hill Capital, a specialist corporate finance and VC firm.
In order to support the growth of the new proof-of-concept solution, which has the potential to increase the resilience of communities most exposed to extreme weather events, Howden has contributed to the premium for the first year. The project is part of a broader agenda to unlock private capital, including donations from individuals, corporates, and foundations, to help fund solutions for those with limited access to traditional insurance products.
Laurent Sabati?, co-founder and executive director at Skyline, said, ?This product demonstrates the potential for parametric insurance to take on risk challenges that dont lend themselves to traditional insurance. We look forward to expanding this concept as we work with financial institutions to increase resilience against climate change and natural disasters by combining insurance innovation with technology.p>
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