The Agricultural Insurance Association of Kazakhstan, Swiss Re and VanderSat jointly developed an advanced agricultural drought insurance product for farmers in Kazakhstan.
Drought insurance in Kazakhstan
Kazakhstan is one of the largest grain producers and exporters in the world. Farmers in North Kazakhstan suffered from drougth in 2008, 2010, 2012, 2017 and 2019 due to a lack of soil moisture, leading to missed income for farmers across the country. Starting May the 15th 2020, farmers can protect themselves against the impact of drought with advanced satellite technology.
The volatility in crop yields is very high in Kazakhstan. For example in 2011, Kazakhstan had achieved record grain harvests of 26.9 million tonnes, followed by drought year 2012, where the Kazakh Agriculture Ministry reported harvest of only 14 million tonnes.
After the drought losses of 2017, the Kazakh Government looked for ways to increase resilience for their farmers and decided to make insurance against drought more technologically advanced by using satellite technology and blockchain and integrating the new insurance products. The insurance can be bought on the AGROINSURANCE platform of Qoldau.kz, the Kazakh Agricultural Management platform, from insurance companies and brokers Zhusan Garant, Victoria, Nomad Insurance and insurance broker Malakut
Farmers can click on their area and immediately see the actual soil moisture conditions in previous years and their payouts for the current year.
About the soil moisture solution
Swiss Re, in close cooperation with Agricultural Insurance Association of Kazakhstan and the Dutch specialist company VanderSat, developed an effective soil moisture deficit index insurance. Contrary to traditional crop insurance where insurance payout is based on loss adjustment in the field, this index insurance product pays out in case the soil moisture deficit reaches a pre-defined level. The soil moisture deficit is closely linked to the drop in yield that occurs due to drought.
The advantages of the solution for Kazakhstan:
- Soil moisture is a parameter that is intuitively understood by farmers
- VanderSat satellite data is not disturbed by clouds, so daily observations are provided
- The soil moisture insurance product is transparent and objective
- The insurance process is 100% digitized and is available at a reduced premium rate
- The pay out in case of drought can be done faster than with classical ways of insuring