Land Bank Insurance Company (LBIC) is set to launch a pilot project aimed at providing affordable drought-risk insurance for smallholder farmers in South Africa. The initiative, in collaboration with CelsiusPro, will be rolled out across five provinces, targeting both crop and livestock producers in a bid to safeguard the livelihoods of vulnerable farming communities.
The pilot project, scheduled to start later this year, will be implemented in the provinces of Eastern Cape, Limpopo, North West, KwaZulu-Natal, and Mpumalanga – regions that collectively house 75% of South Africa’s smallholder farmers.
According to the bank, drought, exacerbated by climate change and the recurring El Niño phenomenon, is the primary risk facing these communities, many of whom are uninsured due to the high cost and complexity of traditional insurance products.
Mitigating drought impact
Pascal Siphugu, managing director of LBIC, said the insurance will be run in five provinces that were hit hard by the severe weather.
“Drought is the main risk affecting the vulnerable farming communities in South Africa, a semi-arid country. The country is also vulnerable to climate change and El Niño which can further exacerbate drought.
“As such, an insurance product of this nature is critically important for the sustainability of agriculture in South Africa, with approximately 250 000 smallholder farmers and a further 1.5 million subsistence farmers largely uninsured due to a lack of tailored agricultural insurance solutions for this market segment,” he said.
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The index insurance products have been developed in partnership with CelsiusPro, a global organisation dedicated to helping businesses and governments mitigate climate risk. CelsiusPro will deploy its proprietary White Label Platform to manage all aspects of the insurance process for LBIC – from pricing and policy management to monitoring and settlement.
Mark Rueegg, CEO of CelsiusPro, expressed enthusiasm about the collaboration. “We are delighted to partner with Land Bank Insurance Company to accelerate the role of index insurance in strengthening climate resilience and food security in South Africa,” he said.
He also highlighted the role of the project in demonstrating the power of catalytic grants from the Natural Disaster Fund, which is supporting this initiative.
“We look forward to deploying our platform technology to support LBIC in introducing innovative agricultural insurance products to the South African market. This project further highlights the scalable impact of the catalytic grants of the Natural Disaster Fund,” he said.
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