Fiji’s Ministry of Economy partnered with UN Capital Development Fund in 2020 on a pilot project aimed at providing parametric insurance to smallholder farmers to cushion them from the financial shocks caused by the cyclical nature of the region’s cyclones and other natural disasters. The defining feature of parametric insurance is that it pays out a previously agreed amount when a specific event occurs.
Funded by the India-UN Partnership Development Fund, the pilot phase of this project – the first parametric insurance offered in the region – insured 1,246 smallholder farmers by end of the project in 2021.ased on that success, the partners have now launched a second phase of the project so as to expand the number of farmers covered.
Unlike indemnity-based insurance, parametric insurance is event specific and offers a quick pay out on claims, often within as little as seven days, allowing the farmers to begin recovery immediately. It enables insurance to reach even remote communities that would otherwise be quite costly to insure based on verifications of damage, rather than on pre-determined weather events occurring.
“The Fiji Government understands the urgent need for innovative solutions to safeguard vulnerable segments of our communities such as women, persons with disabilities, smallholder farmers and our social welfare recipients, against the escalating threats posed by climate change,” said Professor Professor Biman Prasad, Deputy Prime Minister and Minister for Finance, Strategic Planning, National Development and Statistics, at the launch event held on 30 October 2023.
“To further ease the burden on vulnerable segments, the Government has retained the policy of keeping the premiums on all climate and disaster risk parametric insurance products VAT-free,” he continued. “This is expected to provide financial relief to these households and increase access to the product. In addition, as a government, we have set a target to include a minimum of 2,000 social welfare recipients under this scheme to broaden the safety net and build resilience across the country.”
The new phase seeks to cover a minimum of 5,000 households, roughly 25,000 individuals, for the next cyclone season, which would more than double the coverage secured during the first phase.
Also in attendance was the High Commissioner of India, H.E. Palaniswamy Subramanyan Karthigeyan, representing the India-UN Fund. “India’s approach to development partnership is completely demand driven and has a strong focus on high impact community-oriented projects,” he said. “To scale up (the project) with partner UN agencies showcases India’s steadfast commitment to assisting the most vulnerable communities across the world, on the front line of climate change.”
The new project will focus on five key areas each of which draws from the experience of the initial project: customer-centric products and services; strengthening and leveraging digital solutions; reaching more women; and awareness and information refreshers on South-South cooperation.
To ensure the relevance, accessibility, and sustainability of the parametric insurance product, UNCDF will engage and collaborate closely with a wide array of public and private stakeholders. Through extensive consultations with grassroot level organisations, farmers, and rigorous research efforts, the project will implement initiatives that not only meet the immediate needs of the community but have long-term sustainable impact on Fiji’s resilience against climate change and disasters caused by natural hazards.
“India’s well-established parametric insurance solutions, particularly for crops and livestock farmers, will serve as valuable resources for Fiji,” said H.E. Palaniswamy Subramanyan Karthigeyan. “Through this partnership, we are not only sharing expertise but cultivating enduring friendships that will strengthen our collective ability to address the challenges of our times.”