Liberty Mutual Reinsurance (LM Re) has introduced a new parametric insurance product aimed at providing financial protection for Colombian livestock farmers facing extreme weather events.
The product was developed in collaboration with XS Latam, a member of the XS Global Group, and SFA CEBAR.
The product expands on LM Re’s previous drought protection pilot and now covers both drought and flooding. It integrates parametric flood technology from Floodbase and satellite analytics from EarthDaily, offering a structured method to deliver fast payouts following qualifying climate events.
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Colombia’s varied topography contributes to its vulnerability to weather extremes. In recent years, the country has experienced severe droughts and flood events, including a major flood in November that impacted thousands of farms.
The new product aims to provide timely financial relief through parametric triggers based on satellite and geospatial data.
One of the challenges addressed by the product is the frequent cloud cover that limits the effectiveness of satellite-based insurance indexes in Colombia. LM Re said its index allows for daily updates, improving reliability and the ability to issue payouts promptly.
Jean-Christophe Garaix (pictured above), head of agriculture and parametrics at LM Re, said the product is intended to help prevent situations where farmers must sell land to repay annual loans following herd losses caused by adverse weather.
“This product is designed to mitigate that risk, making farming much more resilient. It also simultaneously reduces the risk banks face in offering finance, creating the potential for cheaper loans, which will further help support resilient farming in Colombia,” Garaix said.
Meanwhile, global crop reinsurance is experiencing steady growth, driven by increasing climate-related risks and the need for enhanced agricultural risk management.
In 2024, the market was valued at approximately US$41.39 billion and is projected to reach US$44.29 billion in 2025, reflecting a compound annual growth rate (CAGR) of 7.0%. Looking further ahead, the market is expected to grow to US$57.54 billion by 2029, maintaining a CAGR of 6.8%.
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