Zurich Sharia Launches Parametric Weather Index Insurance for Coffee Farmers
Jakarta, 3 October 2022 – PT Zurich General Takaful Indonesia (Zurich Sharia) has launched Syariah Parametric Weather Index Insurance; an insurance product where claim benefit payments to farmers are carried out automatically based on actual weather data and does not require prior claim submission (“Syariah Parametric Insurance”). In collaboration with Nespresso and Fairtrade NAPP (Network of Asia & Pacific Producers), Zurich Sharia protect more than 1.500 farmers in Aceh as one of the largest coffee producers’ regions in Indonesia. This Syariah Parametric Insurance is the first type of weather protection for coffee farmers existed in Indonesia managed based on sharia principle.
Parametric insurance provides coverage where the coverage benefit is provided when the predetermined parameters (such as rainfall, temperature, wind speed, earthquake) indicate that an adverse risk has occurred.
President Director of Zurich Sharia, Hilman Simanjuntak said “Extreme Weather may inflict a financial loss for the farmers. This Syariah Parametric Insurance will help coffee farmers in Aceh to manage risk through a tailor-made insurance coverage for condition of severe rainfall and drought during the coffee crop’s developmental stages when it is most vulnerable to weather shocks. The development of the product involved Blue Marble Microinsurance that has experience developing parametric insurance products in various countries, especially for coffee plant parametric insurance. This collaboration is to provide effective and targeted protection based on sharia principles. The benefits offered to farmers have gone through an extensive calculation of the various possible weather risks and their protection needs.”
According to data from the Coordinating Ministry of Economic Affairs of Indonesia, Indonesia is the world’s fourth largest coffee producer. The coffee industry also makes a significant contribution to the country’s economic growth, where in 2021 the coffee industry has empowered 1.86 million farming families and contributed 16.15% of the GDP of plantations. However, many coffee farmers remain at risk to weather events which could spoil their coffee crop. Understanding this potential, and to protect our farmers, Syariah Parametric Insurance provides protection through compensation for farmers due to weather factors and climate change, such as drought or extremely high rainfall levels that can harm coffee farmers due to crop failure or decrease in production.
Syariah Parametric Insurance is expected to address the financial vulnerability through the provision of affordable insurance protection against extreme weather conditions as well as open access to more inclusive insurance for millions of coffee farmers in Indonesia.
Chief Sales and Distribution Officer Zurich Sharia, Auralusia Rimadiana said “This year we celebrate 150 years of global Zurich anniversary, and this is Zurich’s effort to open greater access for people who have not had protection services, or in this case coffee farmers. Our premium costs can be adjusted to the needs and abilities of farmers and our product is managed according to sharia principles that uphold togetherness and mutual help, so we hope that the Syariah Parametric Insurance can help provide a sense of security for coffee farmers against extreme climate. Collaborating with Nespresso, and Fairtrade NAPP we hope to be able to contribute to the welfare of farmers in mitigating risks.”
In developing the sharia-based insurance, Zurich has partnered with global partner to measure rainfall, as well as Nespresso and Fairtrade NAPP to oversee the farming community. This product is a result of combined expertise of coffee experts, Blue Marble Microinsurance and Zurich, experts in insurance. Farmers can also gain access to weather data, which transparently provides for parametric insurance services.
Nespresso, “this collaboration helps our farmer to sustain and keep their plants from extreme climate, where today coffee is trending more than ever”.
About Zurich Indonesia
Zurich Indonesia serves customers in the Life also conventional and sharia P&C insurance segments through PT Zurich Topas Life (ZTL), PT Zurich Asuransi Indonesia Tbk (ZAI), and PT Zurich General Takaful Indonesia (Zurich Syariah).
ZTL offers comprehensive protection and financial planning products through a network of distributors (agents, brokers and bank partners). ZAI is 80% owned by Zurich, offers conventional P&C insurance products and services. Zurich Syariah offers sharia-based P&C insurance services.