Parametric insurance for agriculture in the LatAm region: ESG considerations

Brazil | Chile | Peru

This report was co-written by Danielle Cardoso, partner at AZ Cardoso Advogados, Kennedys associate office in São Paulo, Brazil.

Climate phenomena is becoming more frequent. Floods, droughts, frosts, precipitations, amongst others, are more severe, extensive and are appearing in unusual locations.

Many affected companies and farmers are barely able to survive the resultant financial losses from the destruction of agriculture products, their main source of income. This problem impacts all Latin American countries which has been recently amplified by floods and droughts in Chile, La Niña phenomenon in Brazil, the El Niño phenomenon and Cyclone Yaku in Peru.

There are different insurance products available for the agricultural sector that may reduce the financial burden caused by climate change. Parametric insurance is such a product, and provides the speed required to obtain resources in situations characterised by adverse climatic events that often require immediate emergency action.

On 30 November 2023, the United Arab Emirates will be hosting the 28th annual United Nations Climate Change conference (COP28).

Our latest report seeks to raise awareness for governments, corporations and farmers about the benefits of parametric insurance products to protect the agriculture sector in the Latin American region from climate damage.

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We welcome the advent of parametric insurance to the LatAm region which combats the growing protection gap created by climate change and encourage further innovation from the global insurance community.

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