Swiss Re is increasing its focus on parametric insurance solutions as climate variability continues to impact global agriculture.
By offering products tied to measurable environmental triggers, the reinsurer is aiming to deliver faster, more accessible coverage for smallholder farmers and public-sector clients dealing with weather-related losses.
According to Swiss Re, the global average land temperatures have exceeded 2°C above pre-industrial levels, contributing to more frequent and intense weather events such as droughts, floods, and heatwaves.
These conditions are placing strain on traditional agricultural insurance systems, particularly in regions where small farms dominate and loss verification is challenging.
Around 600 million smallholder farmers—producing roughly one-third of the world’s food crops—are among the most exposed to these risks.
Swiss Re’s parametric insurance products are based on predefined triggers, such as rainfall levels, soil moisture content, temperature extremes, and vegetation changes. When these conditions reach a set threshold, payouts are automatically issued, bypassing conventional claims assessments. This allows insured parties to receive funds more quickly, which can be critical during a disrupted growing season.
Swiss Re explained that parametric insurance relies on near real-time data, introducing data providers as central participants in insurance product development.
The reinsurer supports insurers and governments by offering expertise in product structuring and by facilitating connections between carriers and data sources. Its internal crop yield models are designed to reduce basis risk, the gap between payouts and actual losses.
The reinsurer’s Opti-Crop platform combines crop and weather monitoring with a built-in index viewer.
Users can track satellite-based indicators and receive updates on insurance triggers, improving transparency and access to information across all stakeholders.
Swiss Re offers several standardized indices used in parametric insurance. These include the Soil Moisture Index, which captures both drought and excess rainfall; Rainfall and Temperature Indices based on weather station and satellite data; the Normalized Difference Vegetation Index (NDVI), which measures vegetation density; and the Area Yield Index, which compares actual yield to an expected benchmark over a defined area.
Growth in parametric insurance is outpacing traditional agricultural insurance, with estimates placing annual growth at 15%–20% for the former compared to 5% for the latter. Swiss Re's involvement spans multiple regions, including South America, Central Asia, and parts of Africa and Southeast Asia.
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