The Mexican government has announced the launch of Tripartite project in the country to develop a parametric insurance solution for climate-vulnerable smallholder farmers.

The project has been launched in association with Insurance Development Forum (IDF), the United Nations Development Programme (UNDP) and the German government.

IDF members AXA, Guy Carpenter, Munich Re and Swiss Re will lead the public-private partnership, which includes Mexican government-backed re/insurance firm Agroasemex as a local partner for the national insurance programme.

The IT insurance platform will be provided by insurtech firm Raincoat and the local market will be invited to take in the programme during the roll-out phase of the initiative.

Meanwhile, UNDP will offer technical and coordination assistance to provide industry-led risk financing solutions and long-term investments to combine risk-financing and insurance into national development strategy and delivery.

Hector Santana Suarez, Head of Insurance, Pensions and Social Security Unit in the Ministry of Finance & Public Credit, Mexico, noted that 80% of farmers in the country are small farmers and most of them cultivate on non-irrigated lands, making them relatively more susceptible to climate-related risks. Only 18% of those farmers have access to commercial agriculture insurance.

“I greatly welcome the launch of this project in Mexico and the partnership and support from the IDF and its members in helping realise our ambition to provide better protection for low-income farmers against catastrophic events and actively support their progress to more profitable and sustainable farming practices,” Suarez said.

In 2019, the German Federal Ministry for Economic Cooperation and Development (BMZ), the IDF and UNDP announced the Tripartite Agreement, which seeks to provide technical assistance and risk financing solutions to 20 nations exposed to climate change by 2025.

This is the first project to be launched under the agreement in 2022.

BMZ-backed InsuResilience Solutions Fund (ISF) will also provide support to the initiative alongside IDF members.

IDF Sovereign & Humanitarian Working Group industry chair Ivo Menzinger said: “Through the IDF Tripartite projects, the insurance industry is delivering on its responsibility to help developing countries vulnerable to climate change protect their hard-earned development gains while using risk financing tools to increase their financial, physical, as well as social resilience.”