Agricultural insurance in Latin America and the Caribbean Challenges and lessons from innovative experiences

The study focuses on identifying successful agricultural insurance products in Latin America and the Caribbean (LAC) and drawing lessons and challenges from these experiences. Specific objectives include evaluating innovative agricultural insurance products that target small producers, analyzing awareness-raising, marketing, distribution, damage verification, and payment of premiums and compensation strategies, and identifying success factors and limitations of these products. The study identified several innovative products in the region, highlighting four specific cases. In Colombia, CafeSeguro insurance is a parametric insurance for coffee growers that covers rainfall deviations and is marketed through strategic alliances with Nespresso. In Paraguay, microinsurance for sesame covers losses related to water stress and other risks such as hail, strong winds and fires. In El Salvador, Produce Seguro insurance is a parametric climate insurance that protects small producers and microentrepreneurs from earthquakes, excess rain and drought. In Mexico, the Agroasemex insurance scheme includes parametric catastrophic insurance for small producers, financed in part by state subsidies. Key findings of the study include that parametric insurance holds promise for serving smallholder farmers as it reduces damage verification costs. Collaboration between insurers, reinsurers, financial entities and cooperatives is crucial for success. Furthermore, the digitalization of processes and the use of advanced technology, such as satellite images, are essential for the efficiency and sustainability of insurance. However, the study also identified several key challenges. Policy affordability remains a significant barrier for many small producers. It is necessary to design products that better respond to the needs of farmers and overcome the lack of adequate distribution channels and the low digitalization of registration, sales and compensation processes. Furthermore, it is essential to educate and sensitize farmers on the benefits of crop insurance.