Coffee farmers in Vietnam have received the first ever payout of a parametric insurance policy following losses related to low rainfall.

Willis placed the parametric solution with Bao Minh Insurance Corporation in Vietnam in 2024 to protect coffee farmers’ revenue from yield losses caused by low rainfall during the critical flowering period.

The solution uses satellite data to measure rainfall levels in the country’s coffee-growing regions. If the rainfall dips below predefined values, the insurance is triggered and farmers receive timely payouts without the need for lengthy claims processes or on-the-ground assessments.

Risk capacity to support the payouts was provided by the Natural Disaster Fund, a public-private partnership managed by Global Parametrics, and part funded by UK public funds.

Angus Kirk, chief executive of Global Parametrics, said: “We are delighted that the parametric cover has effectively protected coffee farmers in Vietnam. Many of these farmers operate on a small scale with limited financial resources, which constrains their ability to cope with the impact of deviations in rainfall and temperature patterns on their crops.”

Laurent Bossolasco, sustainability manager at ECOM Agroindustrial Corp., one of the world’s largest family-owned coffee merchants, added: “It is vital for the survival of our coffee industry that the weather, market and agricultural risks borne by farmers are shared by market participants. Changing rainfall patterns, droughts and higher temperatures are part of the farming equation and parametric insurance can be a meaningful tool for coffee producers to adapt to climate change.”

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