We'd bet the farm on it… help for agriculture is help for the whole community, including banks and investors

Reducing farmers' income volatility through insurance protection is an important stabilising factor in any economy, not least across Central America and the Caribbean. As the World Bank has pointed out in respect to the developing world, growth in agriculture is twice as effective in reducing poverty as any non-agricultural activity.

Acting on these realities is all the more important given that the natural perils in the region are set to increase as climate change progresses.  So what needs to happen so that agriculture becomes more resilient to external shocks such as floods and droughts? Apart from basic preparation for the increasing frequency of extreme weather events, farmers have to plant the right crops and manage them with new digital tools for precision farming.  This needs support from governments, multilateral donor organisations, NGOs and the private sector. But governments can't shoulder the financial burden of adopting new resilient practices alone.  They need additional support, Investors have to come onboard, and this is where the insurance industry can play a key role. Insurers pay out in the event of a lost harvest and assure lenders that their clients will remain solvent even if disaster strikes. This makes it easier for investors to finance the sector.

Swiss Re says that insurers, governments, NGOs and international organisations have the risk management savvy to help farmers manage their operations in the future. In concert with agriculture, insurance, finance and suppliers, our experts can help make society more resiilient not only with food security but also economically.

The fertile soils in Central America and the Caribbean offer great potential for agriculture – for staple crops to feed the local population as well as for flowers, coffee, fruit and other produce for growing middle classes around the world. Increasing the production of these in a sustainable manner will boost employment rates and stabilise both local economies and society at large.

Insurers can help maintain and accelerate this process. They give private lenders the assurance that farmers will be able to pay back their loans in the event of natural disasters. This will help to unlock capital to grow the sector, and free up scarce state resources to improve other aspects of resilience, such as infrastructure and public health facilities.

The insurance industry can also contribute to the region by sharing its global know-how from other countries where insuring farmers is already commonplace. This is important because the best thing beyond receiving insurance payouts is not to suffer any losses in the first place.

Supporting financial resilience

Re/insurance supports financial resilience by acting as a shock absorber and promoting growth through its core businesses. This is particularly important in a challenging and volatile macro-economic environment.

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