Drought insurance for Kazakh farmers

Soil moisture, Insurance & Banking

The Agricultural Insurance Association of Kazakhstan, Swiss Re and VanderSat have jointly developed an advanced agricultural drought insurance product for farmers in Kazakhstan. Unlike traditional crop insurance where insurance payout is based on loss adjustment in the field, this index insurance product pays out in the event of the soil moisture deficit reaching a pre-defined level.

SwissRe wants to provide reliable, transparent and accurate agricultural drought insurance to clients around the world. Insurance of this kind relies on an index as a proxy for agricultural losses, one that farmers can easily understand.

Since June 2020, the new soil moisture index insurance product has been operational in over ten countries and is set to expand into new geographies.

VanderSat provides data at field level, backed by a long-term historical record and unhindered by cloud interference. This winning combination provides a solid foundation for the development of scalable index-insurance products. Soil moisture is a direct measurement of the water available for plant uptake and therefore provides a critical parameter for estimating agricultural losses due to drought.

VanderSat delivers an independent satellite data service which (re)insurers can trust. The insurance product that SwissRe has developed is based on the satellite dataset supplied by VanderSat.

Marcel Andriesse, Swiss Re (Senior Underwriter Agriculture, Vice president Property, Specialty Underwriting):

“The data service is fully operational and near real time. As such, it is possible to warn farmers when a drought builds up, giving farmers a chance to react,”

Kazakhstan is one of the largest grain producers and exporters in the world. Farmers in North Kazakhstan suffered from drougth in 2008, 2010, 2012, 2017 and 2019 due to a lack of soil moisture, leading to missed income for farmers across the country. Starting May the 15th 2020, farmers can protect themselves against the impact of drought with advanced satellite technology.

The volatility in crop yields is very high in Kazakhstan. For example in 2011, Kazakhstan had achieved record grain harvests of 26.9 million tonnes, followed by drought year 2012, where the Kazakh Agriculture Ministry reported harvest of only 14 million tonnes.

After the drought losses of 2017, the Kazakh Government looked for ways to increase resilience for their farmers and decided to make insurance against drought more technologically advanced by using satellite technology and blockchain and integrating the new insurance products. The insurance can be bought on the AGROINSURANCE platform of Qoldau.kz, the Kazakh Agricultural Management platform, from insurance companies and brokers Zhusan Garant, Victoria, Nomad Insurance and insurance broker Malakut.

Learn more

About advanced agricultural drought insurance product for farmers. Feel free to contact me.

Berend de Jong MSc
CCOberenddejong@vandersat.com

Related cases