BAO MINH INSURANCE TEAM UP WITH TECHNOLOGY PARTNER HILLRIDGE TO OFFER INSURANCE FOR FARMERS

Australian insurtech firm Hillridge launched a new partnership with Bao Minh Insurance on March 7 that offers its new Typhoon Index Insurance product, a Vietnam-first new parametric product to protect Vietnamese acacia timber farmers from the nation's devastating typhoons.

Powered by Hillridge's platform, Typhoon Index Insurance is based on a simple, online purchasing process, with a transparent and pre-determined calculation that will typically see farmers, plantations, and agribusinesses receive reimbursement from Bao Minh for damage to their crops, plantations or livestock within ten days. Payouts are calculated by a satellite-based system that measures the severity of a typhoon and the distance of the farm from that storm.

According to Hillridge's CEO Dale Schilling, unlike traditional indemnity-based insurance, where pay-outs are determined through a damage assessment that can see cumbersome processing times and delayed claims, parametric insurance pays out, typically within 10 days, based on a transparent, predetermined calculation.

Vietnam, which has an annual typhoon season that stretches from June to November, typically sees 4-6 major tropical storms hit its shores each year, has a particularly hazardous agriculture sector, which is frequently devastated when these storms strike land.

For example, 2017's Typhoon Damrey saw VND22 trillion (roughly $1 billion) of economic damage to farmers, especially in forestry, agriculture and aquaculture.

“Vietnam is particularly susceptible to weather volatility, and that further increases the risks that Vietnamese farmers find themselves living with,” said Schilling. “Of particular concern is climate change, which sees the typhoons striking Vietnam carrying more rain than in the past, triggering catastrophic events including floods and landslides,” he added.

Alarmingly, less than 5 percent of farmers nationally are reported against these kind of adverse weather events.

The system relies upon satellite-based weather monitoring from the University Corporation for Atmospheric Research (UCAR), which is sponsored by US government agency the National Science Foundation, coupled with classifications defined by the Vietnam Meteorological Hydrological Administration.

Based upon this data, Hillridge's award winning system processes claims based on typhoon windspeeds and distance (within 100km) from the published farmer.

At a ceremony held in Ho Chi Minh City earlier this week, attended by representatives of USAID's Sustainable Forest Management Project, Hiep Thuan Agricultural Cooperative became the new product's inaugural customer. The cooperative inked a deal with Bao Minh to insure farmers in Quang Nam province's Hiep Thuan Agricultural Cooperative against adverse weather incidents and the impacts of longer-term climate change. USAID is supporting the first year of the insurance's implementation, along with other technical assistance to Hiep Thuan.

Cooperative representative Nguyen Huu Duong said that with this insurance policy, especially with technical assistance from USAID, the company can help 40 forest owners cover 154.46 hectares of acacia plantations under improved forest protection practices, creating peace of mind for forest owners to develop local materials areas and therefore increasing market access for certified timber.

“We commit to becoming a bridge with notified cooperative members to implement the programme effectively under the contract. At the same time, we will strengthen communication with forest owners in the area to attract community participation to continue expanding insurance coverage to the remaining 1,200 hectares of the cooperative and mobilize more participation of preliminary processors and traders in the local acacia chain,” added Duong.

This project aims to pilot this insurance programme and provide a platform that can be adapted and adopted for other stakeholders, including forest owners, businesses, and government agencies.

With this foundation in place, Bao Minh is bullish about the potential of this new product for Vietnam's agriculturalists.

“We see tremendous opportunities for this product for farmers in sectors including aquaculture, forestry, and crops including fruits, sugarcane and rubber, especially in Vietnam's central provinces such as Thanh Hoa, Nghe An, Quang Nam, Binh Dinh, and Binh Thuan, which face devastating storms every year,” said Anh from Bao Minh.

“These industries are not just vital for the incomes of the impacted farmers and their families, but also for the nutrition of Vietnam and its people, as well as representing significant export businesses for the economy of the entire nation,” he added.

Policies are available with cover from as low as VND10 million ($416), up to 75 per cent of the entire published value of the farmer's assets, with guaranteed affordable and accessible cover no matter the scale of the farmer's operations.

Source: VIR