Small-scale farmers in Nepal are celebrating receiving an insurance payout after their losses and livelihoods were protected using an innovative parametric product, which leverages satellite data to determine the availability of water for crops. In what is likely the first payout of its kind in Nepal, communities are experiencing the benefits of this pre-arranged financial support before the full impact of the drought can take hold. This is a significant step forward in anticipatory humanitarian action.
The payout is the third that Tearfund has received globally as part of a pilot programme testing new approaches to provide anticipatory finance in the context of climate disasters. It comes in the form of an innovative risk transfer product, developed by Global Parametrics (a CelsiusPro Group company) and funded through a premium subsidy from Humanity Insured, a UK registered charity backed by the insurance sector.
The $100,000 payout, triggered by drought conditions, enabled Tearfund to support 671 households in Bajura district with food packages and distribute drought-resistant vegetable seeds, training and tools to 405 individuals (103 men, 302 women). The money was also used to install water collection tanks for small-scale irrigation purposes to 176 households.
In communities where hunger was already hitting hard, Tearfund, together with local partner International Nepal Fellowship, also distributed rice, lentils, oil and salt to support families through a period of extreme food scarcity. Bune Sunar, 59, who had started skipping meals to survive on the last of the soya beans and maize, said: ‘In my whole life, I have never seen this much food in my house at one time.’
Tearfund’s Country Director for Nepal, Pranaya Pandey Chhetri, said: ‘The gap between the cost of global disasters and the finance available to respond to their impact is growing. People like Bune Sunar, at risk of extreme drought and famine, must have fair access to insurance. Having this emergency safety net means they can keep their assets, develop other ways to earn a living, and avoid sinking deeper into poverty.
‘We are increasingly concerned about hunger and food scarcity. Cycles of flooding and drought makes farming extremely challenging across Asia, including Nepal, and conflict is disrupting supply chains for agriculture globally. This insurance innovation brings vital finance to support those on the front lines of the climate crisis. This payout is helping people keep hope alive through a desperate food shortage.’
Traditionally Bune’s community grows wheat, millet and rice, but floods last summer swept away his fields and the winter that followed brought a severe drought that left the land dry and unproductive. He used to be able to harvest four modest sacks of grain that would support his family for up to four months. This year he had enough to be self-sufficient for just one month, but was fearful that his harvest would fail entirely. Bune is also a blacksmith who crafts kitchen utensils and farming tools such as sickles. Sometimes his customers pay in grain. But with a large family of 11, even this livelihood was not bringing in enough to make sure no-one went hungry. Without the payout, Bune and his family would have been sliding deeper into poverty and the crippling anxiety that comes with not being able to provide.
Mark Rüegg, CEO of CelsiusPro Group, said: ‘This is a powerful example of how parametric risk transfer solutions can be used in a very practical way. Fast, pre-arranged financial aid can make a real difference to families struggling to maintain food security, build resilience and avoid being pushed further into poverty. This is the kind of practical support CelsiusPro Group wants to deliver to climate-vulnerable communities and it is a privilege to play a part in work that has such a clear impact.’
For more information about the work of Tearfund or to donate, please visit www.tearfund.org
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For further information or interview requests call Esther Trewinnard on 07783 409045 or for out of hours media enquiries please call 07929 339813.
Notes to editors
For additional photographs or to use video footage showing agricultural training and distribution of tools and farming equipment, please contact [email protected] or call 07783 409045.
This payout is the result of an innovative parametric product, which leverages satellite data to determine the availability of water for crops. When the level of soil moisture falls below a pre-agreed threshold in a defined timeframe, the payout is triggered without the need for loss estimations. This provides fast, transparent and reliable financial relief for farmers who would otherwise see their yields at risk, threatening communities with extreme hunger. The payout helps farmers proactively take measures that improve food security for their communities.
The risk capacity is provided by the Natural Disaster Fund (NDF) a disaster risk financing vehicle managed by Global Parametrics and funded by the UK government’s Foreign, Commonwealth and Development Office and by Germany’s development bank KfW on behalf of the German Ministry for Economic Cooperation and Development (BMZ). The product was developed with a catalytic grant provided by the NDF Technical Assistance Facility, funded by KfW on behalf of BMZ.
CelsiusPro Group is a technology-driven underwriter that provides climate and natural catastrophe insurance using satellite data to automatically pay out when natural catastrophes and extreme weather hits. Our platform solutions integrate climate data and risk modelling which enables insurance companies and brokers to distribute and manage tailored parametric insurance.
In 2023, CelsiusPro Group acquired Global Parametrics, a parametric risk transfer provider that supports natural disaster resilience for climate-vulnerable communities. Global Parametrics mobilises risk capacity to underwrite parametric coverage through dedicated structures, which are backed by AA-ratings reinsurers.
Through our consulting services, CelsiusPro Group provides end-to-end insights via climate risk assessments, disaster risk financing strategies, as well as structuring and risk modelling for insurance initiatives.
CelsiusPro Group advances parametric risk transfer from the fringes to the forefront in climate and natural catastrophe protection. Learn more: https://www.celsiuspro.com/
The Natural Disaster Fund is a public-private partnership between CelsiusPro Group and leading global insurers Hanover Re and Canopius. CelsiusPro Group’s work focuses strongly on supporting vulnerable communities in the Global South, where climate-related disasters are increasing in frequency and severity.
The NDF is managed by Global Parametrics - a CelsiusPro subsidiary - and is capitalized by commitments from the UK government’s Foreign, Commonwealth and Development Office and Germany’s development bank KfW on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ). Their public investment is blended with matching risk capacity from Hannover Re. Learn more: https://www.naturaldisasterfund.com/
Humanity Insured, set up with the backing of the insurance industry, is a registered charity in the UK (Charity Number:1209214), and a registered not-for-profit non-stock entity in the US. Humanity Insured uses private and philanthropic capital at scale to help people on the climate crisis frontline access and pay for new forms of insurance. It is making insurance accessible and effective for vulnerable communities, empowering them to build climate resilience through financial resilience, and helping them protect their futures. For more information, please visit humanityinsured.org
Tearfund is a Christian charity that partners with churches in more than 50 of the world’s poorest countries. We tackle poverty through sustainable development, responding to disasters and challenging injustice. We believe an end to extreme poverty is possible. Tearfund is also a member of the Disasters Emergency Committee. For more information about the work of Tearfund, please visit www.tearfund.org.
International Nepal Fellowship is a health and development charity serving the most disadvantaged people and communities in Nepal. https://www.inf.org.uk/
