Following the success of its Weather Index Insurance for rice farmers launched in
November 2022, Igloo expands its reach to coffee farmers in Vietnam and in other countries
Regional insurtech Igloo expands its blockchain-based parametric index insurance to coffee farmers in Southeast Asia, showing commitment to covering more underinsured communities and industries after successful product implementation with rice farmers.
Southeast Asia – a part of what is called the coffee belt – is one of the biggest coffee producers
in the world. While Vietnam and Indonesia are responsible for the majority of global coffee
output, the Philippines is also an important global producer with industry revenue expected to
reach US$6.7 billion in 2023, according to statistics portal Statista. The local market is also
expected to grow annually by 5.69% until 2025.
Coffee production is not only a long-term and labor-intensive investment, but it is also one that
is constantly under threat of climate hazards which provide difficult growing conditions due to
extreme climate–affecting farmers and disrupting supply chains.
“Weather Index Insurance is a product that we introduced in order to protect farmers and
communities across Southeast Asia from unforeseen climate hazards. While initially introduced
for rice farmers, we’ve seen from its success the product’s scalability to cover other sectors like
coffee farms, which is one of the robustly growing segments in the region,” said Mario Berta,
Igloo’s Country Manager for the Philippines.
Protecting the coffee industry and its farmers
There are currently several insurance products on the market for coffee farmers. However, they
share a common problem of incompatibility with the real, frequent risks faced by coffee farming
families. The damage assessment process is also complex and time-consuming, which creates
the risk of additional financial hardship for farmers.
The Weather Index Insurance eliminates the need to individually verify claims thereby reducing
transaction costs and enabling faster payouts to farmers. This is done by collecting and
monitoring rainfall data to calculate claims using pre-assigned values for losses due to natural
causes. The business rules governing claims payout being hosted on a public blockchain help
leverage the attributes of transparency, consistency, and unbiasedness, thereby making the
setup credible.
While Weather Index Insurance is currently available in Vietnam for rice and coffee farmers,
Igloo expects to roll out Weather Index Insurance to more countries in Southeast Asia including
the Philippines soon.
“The Philippines being an agricultural powerhouse and one that is at a higher risk of suffering
from the impacts of climate change, is a country we believe will benefit from having Weather
Index Insurance. We are currently working with our partners to make this product available in
the country and other markets in the near future. In addition, we are also exploring expanding
the product’s coverage to include other indices such as earthquakes,” Mario added.
