The InsuResilience Solutions Fund (ISF) is co-funding the development and implementation of a national parametric insurance scheme designed to protect Indonesia’s coffee and cocoa farmers from the escalating risks of climate change.
The initiative is a collaborative effort with Blue Marble Microinsurance, a London-based InsurTech company, and PT Asuransi Jasa Indonesia (JASINDO), a state-owned insurance provider. The Ministry of Agriculture of Indonesia represents the demand side of the partnership.
Indonesia is one of the world’s largest coffee and cocoa producers, but frequent extreme weather events—flooding, storms, landslides, and droughts—have disrupted the livelihoods of 2.3 million smallholder farming households.
Climate change impacts like rising temperatures, erratic rainfall, prolonged dry spells, and pests have significantly lowered crop yields, jeopardising farmers’ economic stability and harvest quality.
The project aims to provide a financial safety net that stabilises farmers’ incomes and prevent households from falling into poverty following climate-related harvest failures through tailored, data-driven coverage.
Unlike traditional insurance, which requires manual damage assessments, this parametric solution uses satellite data to trigger automatic payouts based on specific environmental conditions.
The insurance products provide protection against drought and excess rainfall, tailored to the specific risks and harvest calendars of different regions.
Farmers can choose between basic coverage or additional protection for specific phases of crop production, ensuring flexibility and relevance to their needs.
The product development process includes submission of the insurance designs for regulatory approval by the Indonesian Financial Services Authority (OJK) as well as the mobilisation of both local and international reinsurance capacity.
At the national level, JASINDO will underwrite and manage the insurance products in line with Indonesia’s reinsurance requirements. Internationally, Blue Marble’s network of reinsurers, including Aspen, ASSA, MAPFRE, TransRe, and Zurich, will provide additional risk-sharing support.
The Ministry of Agriculture and its provincial Dinas Pertanian offices will lead distribution, leveraging their established network previously used for rice and livestock insurance.
Payouts will be facilitated through two potential channels. The first one involves direct payouts to farmers via bank accounts, farmer cards (Kartu Tani), or group accounts.
The second channel is through the integration with Kredit Usaha Rakyat (KUR) loans, the government-supported People’s Business Loan scheme for SMEs, where insurance proceeds first service outstanding debt before the remainder is transferred to the farmer.
