Drought Index Insurance using satellites: Now mature and growing fast in 2020

• Loss adjusters – insurance agents who assess the amount of compensation that should be paid after a person has claimed on their insurance policy – are not needed to provide it. This allows the service to operate even in times when travel is restricted
• High resolution satellite data decreases basis risk creating a step change improvement compared to traditional rainfall solutions
• Index product development can be delivered in days/weeks, so sales of new policies in the 2020 growing season are still possible
• Efficient product pricing is possible due to 100% automated processing of the insurance

Drought index insurance is now mature. In 2019 farmers in 6 countries on 3 continents have insured their crops against drought, while in 2020 another 8 countries are planned to start this service. For the first time ever countries such as Cambodia, Russia, Ukraine, Latvia, France, and Kenya are using the latest technology available.

Case: the opportunity for Drought Index insurance in Europe

Drought has been hitting farmers in Europe hard over the past years. Again 2019 proved to be a challenging year. The satellite map of drought below shows the hardest hit areas. Farmers in the center of France, parts of Ukraine, Russia, and Latvia that were hit by a severe drought received full or partial payout via their brokers and insurance agencies.

Satellites monitor these lands on a daily basis, gathering information that is then processed by the Dutch company VanderSat. VanderSat is an independent provider of data and delivers measurements on a daily or weekly basis to insurers, brokers, and agents who then communicate this to their clients: farmers and farmer cooperatives.