Tearfund, the UK-based international humanitarian and development organisation, has reported what is believed to be the first drought insurance payout of its kind in Nepal, helping vulnerable families avoid severe food shortages and deeper poverty following failed harvests.
The payout was triggered through a parametric insurance product developed by Global Parametrics, part of CelsiusPro Group, which uses satellite data to monitor water availability for crops.
The scheme is designed to release funding quickly when drought conditions reach agreed thresholds, allowing support to reach communities before the worst impacts are felt. The insurance premium was supported by Humanity Insured, a UK-registered charity backed by the insurance industry.
According to Tearfund, the initiative forms part of a wider pilot programme testing new approaches to anticipatory finance in areas affected by climate-related disasters. The Nepal payout is the third received globally under the programme.
The US$100,000 payment enabled Tearfund to provide emergency food assistance to 671 households in Bajura district, one of the areas hardest affected by drought conditions. Tearfund also distributed drought-resistant vegetable seeds, farming tools and agricultural training to 405 people, including 302 women and 103 men. Water collection tanks for small-scale irrigation were also installed for 176 households.
Working with local partner International Nepal Fellowship, Tearfund distributed essential food supplies including rice, lentils, oil and salt to families experiencing acute food shortages after crop failures.
Among those supported was 59-year-old blacksmith and farmer Bune Sunar, whose family had been surviving on limited supplies of maize and soya beans as food stocks declined. “In my whole life, I have never seen this much food in my house at one time,” he added.
Tearfund said farming communities in Bajura have experienced repeated climate-related challenges in recent seasons. Flooding last summer damaged farmland and crops, while the following winter brought severe drought conditions that left fields dry and unproductive.
Bune Sunar traditionally grows wheat, millet and rice, harvesting enough grain to feed his family for several months each year. However, Tearfund said this year’s harvest provided enough food for only a single month. In addition to farming, he works as a blacksmith producing kitchen utensils and agricultural tools, with some customers paying him in grain rather than money. Tearfund noted that supporting a household of 11 had become increasingly difficult as harvests failed and food shortages worsened.
Pranaya Pandey Chhetri, Tearfund’s Country Director for Nepal, said access to financial protection mechanisms is becoming increasingly important as climate-related disasters intensify.
“The gap between the cost of global disasters and the finance available to respond to their impact is growing. People like Bune Sunar, at risk of extreme drought and famine, must have fair access to insurance. Having this emergency safety net means they can keep their assets, develop other ways to earn a living, and avoid sinking deeper into poverty,” she commented.
“We are increasingly concerned about hunger and food scarcity. Cycles of flooding and drought makes farming extremely challenging across Asia, including Nepal, and conflict is disrupting supply chains for agriculture globally. This insurance innovation brings vital finance to support those on the front lines of the climate crisis. This payout is helping people keep hope alive through a desperate food shortage.”
Mark Rüegg, Chief Executive of CelsiusPro Group, said the payout showed how parametric insurance products can provide practical and timely support to communities exposed to climate risks.
“This is a powerful example of how parametric risk transfer solutions can be used in a very practical way. Fast, pre-arranged financial aid can make a real difference to families struggling to maintain food security, build resilience and avoid being pushed further into poverty. This is the kind of practical support CelsiusPro Group wants to deliver to climate-vulnerable communities and it is a privilege to play a part in work that has such a clear impact.”
Tearfund said the programme reflects a growing focus within the humanitarian sector on anticipatory action, where funding is released before crises escalate in order to reduce suffering, protect livelihoods and strengthen resilience in vulnerable communities.
