Over 500 million smallholder farmers face catastrophic risks, including drought, floods and hurricanes, while producing 80% of the food we consume. Climate change is only exacerbating these risks, and farmers are bearing the brunt of it.
Billions of dollars are lost to crop loss and damage each year with farmers in low-income countries absorbing most of that damage. In fact, FAO estimates 82 percent of all damage and loss caused by drought was absorbed by farmers in low- and lower- middle-income countries. Yet, there are few safety nets to protect farmers. Globally, less than 20% of smallholder farmers have any form of agri-insurance coverage.
Most agri-insurance products are area-yield index products, meaning that indemnity is based on the harvested average yield of an area. A physical verification process is usually required to do both baseline assessments and determine payouts. Imagine a field agent travelling to the hinterlands of rural India to verify claims. Not only is this process time-consuming and costly, but it’s also oftentimes inaccurate.
Historically, this manual process was the only real solution given the lack of granular weather data for a specific geographic area. However, improvements in weather data availability through satellite images coupled with digital banking penetration amongst farming communities has disrupted business as usual.
This is why we’re excited to invest in IBISA.
IBISA is a turnkey solution for agri-players to unlock agri-insurance for smallholder farmers around the world. IBISA has developed a proprietary weather-indexed parametric platform that allows index design, policy management and automated remote loss assessment based on satellite data. Their digital assessment system and low-cost distribution model that leverages partnerships makes insurance products more readily available and affordable for smallholder farmers.
IBISA’s platform mitigates the risk exposure of serving smallholder farmers, effectively enabling farmers to benefit from value-added services from corporate lenders, agri-processors, and the like. IBISA has the potential to radically expand the $34 billion crop insurance market by unearthing an underserved market segment. Within a few short years, IBISA has partnered with farmers’ associations, agri-processors, and lenders to develop micro-insurance products and distribute them to farmers in India, the Philippines, and Niger.
The founding team comes with strong technical and market expertise. Maria Mateo Iborra worked in the satellite industry for many years. At SES Satellites, she developed a strong understanding of how orbital images can be used across a range of products. Jean-Baptiste Pleynet and Annette Houtekamer both hail from the insurance industry. They’ve respectively developed software and products for global solutions.
While it’s early days for the company, we are excited to partner with the team as they build this global agri-fintech platform to protect smallholder farmers from climate shocks.