Insurance for agricultural microcredit schemes to support adaptation to climate change

Project description

Title: Insurance for Agricultural Microcredit Schemes to Support Adaptation to Climate Change
Commissioned by: International Climate Initiative (IKI) with financing through the German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB)
Country: Peru
Lead executing agency: Agencia Peruana de Cooperación Internacional (APCI)
Overall term: 2010 to 2013


Extreme climate phenomena such as El Niño have increased in intensity and frequency and are most probably attributable to climate change. El Niño is causing billions of dollars worth of damage in Peru. Agriculture, which plays an important role in the national economy, is particularly affected. The livelihood of those affected – mostly small and medium-sized farmers – is often threatened as a result of crop failures. To reduce their risks, it is crucial that the farmers – and also the financial institutions providing them with financing, and local governments – are insured against damage resulting from climate change.


Farmers, producer associations, individual companies and regional financial and government institutions in the northern coastal region of Peru can be insured against extreme climate events through newly developed, innovative insurance products.


In the regions along the northern coast of Peru (Piura, Lambayeque and La Libertad) that are particularly strongly affected by the extreme climate phenomenon El Niño, index-based insurance schemes against climate risks are being developed and introduced. Unlike conventional agricultural insurance, they are based not on the measurement of actual damage, but on the occurrence of previously established climate data parameters that have been proven to predict damaging events, such as the rise in the temperature of the ocean surface off the coast of Peru, which correlates with the onset of the El Niño phenomenon. The programme is being implemented in cooperation with various government institutions, private insurance companies, and national and international financial and research institutions.

Results achieved so far

Determination and strengthening of the regional demand for climate insurance

  • Individuals and companies have been informed about climate variations and accompanying risks as well as climate-related insurance products. Insurance agents have been trained.
  • The insurance company La Positiva Seguros used the needs assessments carried out on behalf of the project in order to design climate insurance policies.
  • The regional governments of Piura, Lambayeque and La Libertad use information generated at the Research Center of the University of the Pacific in Lima on possible financial losses resulting from an extreme El Niño event in order to develop a strategy on financial risk management.

Development of climate-related insurance products

  • An insurance policy approved by the regulator for banks, insurance companies and private pension funds (SBS) is available. This ‘Insurance against the extreme weather phenomenon El Niño’ is being offered on the Peruvian market.
  • In 2011, one of the project’s innovative insurance packages was taken up and marketed by La Positiva Seguros insurance company. This provided some US$4.6 million dollars' worth of cover, corresponding to 585 agricultural loans, for a possible El Niño event in the 2012–2013 period.
  • In 2012, Caja Nuestra Gente savings bank acquired the insurance product, which it uses to service clients in the target regions Piura, Lambayeque und La Libertad. It safeguards 3,560 agricultural loans worth USD 27.3 million granted to farmers for the period 2013–2014.

Adapted normative and institutional framework for developing climate insurance products

  • A stable institutional relationship with the insurance regulator was established to provide support in the political regulatory processes for climate insurance policies.
  • Suggestions for improving governmental agricultural disaster insurance were implemented through a ministerial decision.

Replicability and visibility at national and international level

  • International workshops on the topic were held in 2011 and 2013; each attracted more than 170 experts from 17 countries.
  • Training in the area of index-based insurance schemes for climate phenomena is provided through a degree programme and a digital compendium

Additional information