The Insurance Development Forum (IDF), the United Nations Development Programme (UNDP), the German Government, and the government of Uzbekistan rcecently launched a €1.9 million project to develop and implement a sovereign risk transfer scheme for climate-vulnerable farmers in Uzbekistan.
The idea is to create a multi-peril indemnity insurance solution that will compensate based on the real crop loss, evaluated by loss adjusters that will be trained during the project.
Importantly, this approach facilitates direct interaction with farmers, and in turn fosters the development of local insurance markets and knowledge transfer regarding risks and crops.
In the first year, the team will conduct a pilot of the insurance products in Fergana, Namangan, and Andijan oblast. In the second year of implementation, the project plans to expand the coverage by including additional types of fruits and or vegetables.
The project, developed under the Tripartite Agreement, will benefit nearly 17,000 smallholder farmers and their families over two years.
Agriculture is vital in the region as it accounts for approximately 35-40% of the national GDP of Uzbekistan’s economy. In the sector, dehqan farmers also known as smallholder farmers, occupy 13% of the cultivated land and contribute about 65% to the gross agricultural output.
However, the heavy reliance on agriculture through smallholder farms makes the country highly susceptible to climate risks and natural disasters, hence the new project.
Alisher Shukurov, Deputy Minister of Agriculture in the Republic of Uzbekistan, said, “UNDP is a trusted partner of the Ministry of Agriculture of Uzbekistan in combating climatic risks in agriculture and building the resilience of the farmers and smallholders.
“Therefore, we believe that the current new joint initiative will transform the agricultural insurance market in the country and will support our efforts for agri-food climate change adaptation and mitigation.”
IDF Members Europa Re and Swiss Re are partnering with two local insurance companies, Uzagrosugurta and Semurg, to work together to develop an agriculture insurance product for Uzbek farmers.
The Uzbekistan Ministry of Agriculture will closely collaborate in the project, supported by the UNDP country office. The InsuResilience Solutions Fund (ISF) co-funds the project implementation, helping to accelerate growth and enable the potential extension throughout the country.
Anas Fayyad Quarman, UNDP Uzbekistan Deputy Resident Representative, said, “In the face of accelerating climate risks and natural disasters worldwide and in Uzbekistan, the upcoming project will help to build the resilience of the farmers and smallholders in the country. To this end, the project facilitates and promotes a risk-informed decision-making process in the agriculture sector for farmers and the Government alike by enhancing their knowledge and capacity in collaboration with international industry members. Further, it will contribute to strengthening national food security and enhance the resilience of rural communities against climate risks and accelerate the achievement of SDGs in the country.”
Nadica Jovanovska Boshkovska, Chief Project Officer, Europa RE, added, “By facilitating the transfer of local knowledge and establishing direct relations with beneficiaries, we are able to create insurance products that are not only more relevant but have real impact to the lives of small-scale farmers in Uzbekistan.”
Ivo Menzinger, Co-Chair of IDF Sovereign & Humanitarian Solutions Working Group and Head Europe, Middle East & Africa and Managing Director Public Sector Solutions at Swiss Re, concluded, “Situated within the framework of the impactful and collaborative Tripartite scheme, this initiative resonates well beyond the fields of Uzbekistan. By supporting climate-exposed farmers, it not only cultivates resilience but uplifts entire communities. The project underscores the important role of public-private partnerships in driving impact and closing the protection gap around the world. I would like to acknowledge the contributions of our IDF members from industry, UNDP and BMZ/ISF, whose continuous commitment and collaboration have been central in bringing this vision to reality.”
