New Report Reveals $6.8 billion USD Opportunity for Cutting-Edge Insurance Solutions to Safeguard Mekong Delta Farmers from Climate Change
Agricultural and aquaculture production worth more than $6.8 billion USD could be highly suitable for protection by parametric insurance, a new form of cover that protects against climate extremes, according to a report by Hillridge, an Australian insurtech company.
In partnership with MSIG Vietnam and the Australian Department of Foreign Affairs and Trade (DFAT), Hillridge today unveiled a market report titled "Weather-proofing Agriculture in the Mekong Delta." This analysis underscores the critical demand for innovative insurance solutions designed to safeguard the livelihoods of farmers in the Mekong Delta against the increasing threats posed by climate change.
The Mekong Delta, a cornerstone of Vietnam’s agricultural output, is facing severe threats from climate change, including erratic rainfall, rising temperatures, storms, and drought. Parametric insurance is particularly well-suited for mitigating these climate risks. It offers quick payouts based on predefined weather triggers, such as rainfall levels or temperature thresholds, eliminating the need for lengthy damage assessments. This rapid response is crucial for farmers and aquaculture producers who require immediate funds to recover from climate-related events.
The "Weather-proofing Agriculture in the Mekong Delta" report analyses the agricultural landscape in the region, highlighting rice, mango, durian, and shrimp as priority commodities for parametric insurance due to their susceptibility to climate risks. "Parametric insurance can play a significant role in mitigating climate risks, offering a vital safety net for farmers in the Mekong Delta,” shared Dale Schilling, CEO of Hillridge. “We will continue to leverage our expertise in insurance product design and technology to equip farmers with the tools needed to protect their livelihoods against climate volatility.”
Up to 40% total production of the region can be protected by parametric insurance. Given current low coverage rates, it has a significant potential for expansion in the future, highlighting the need for increased government support to realize its full potential.
The report also notes the importance of educating farmers on parametric insurance to increase its adoption and trust, noting that many are unaware of its benefits despite some familiarity with traditional insurance.
Ms. Nguyen Lan Phuong, Deputy General Director of MSIG Vietnam, shared: "At MSIG Vietnam, supporting the Vietnamese agricultural sector and its farmers is a key part of our mission of social contribution. Our partnership with Hillridge and DFAT enables us to provide innovative solutions like parametric insurance to Mekong Delta farmers, offering them much-needed financial security against unpredictable weather events.”
The launch of this report marks a significant milestone in Hillridge’s ongoing efforts to mitigate the impacts of climate change on agriculture. It is part of the partnership between Hillridge, MSIG Vietnam, and the DFAT under the Business Partnership Platform (BPP) to develop and promote parametric insurance solutions tailored to the specific needs of Mekong Delta farmers. A key component of this BPP partnership is to promote access to parametric insurance for female smallholder farmers and other groups who are disproportionately affected by climate change and often lack resources to effectively deal with its effects.
