Fueling insurance penetration for CLIMBS Insurance in the Philippines
The Philippines is one of the most typhoon-prone countries in the world, with an average of 20 typhoons affecting the country each year.
The country is also vulnerable to droughts, caused by El Nino, and torrential rains. When any of these extreme weather events happen, farmers can lose their entire annual income and all farm investments that they have made.
74% of the Philippines’ population is exposed to risk of multiple hazards. In an average year, a corn farmer, for example, loses 5.9% of his harvest to typhoons, droughts and excess rain. This puts many in a state of poverty and reduced food security: 39% of farmers reduce meal portions to cope with these losses.
CLIMBS Insurance had a challenge before them!
CLIMBS is the second-largest mutual insurer in the Philippines, with a network of more than 4,000 cooperatives throughout the country. For decades, they have sold all types of life and non-life insurance to groups of farmers.
However, seeing the upsurge in weather-related calamities and its impact on agriculture, crop insurance became one of the priorities for CLIMBS under its non-life insurance segment. By doing so, CLIMBS gets a first-mover advantage as the area of parametric insurance for farmers in the Philippines is virtually untapped. It is a way to distinguish themselves from others in the market.
But designing, operating and managing a parametric insurance with scalability required specific technical expertise and that’s where the CLIMBS team reached out to IBISA!
How did we help CLIMBS overcome this challenge?
IBISA has up till now designed, operated, and managed the policy management for a parametric insurance product that covers against excess rainfall and excess wind speed for CLIMBS in the Philippines. It uses ERA5 data, the golden standard in parametric insurance design, that ensures that the product can be offered anywhere in the country. IBISA designs the product, based on specific customer demands. It sends notifications to CLIMBS anytime there is a trigger. CLIMBS and policyholders can monitor the performance of all policies on the IBISA platform. CLIMBS underwrites the product and makes the payouts to the cooperatives.
And the partnership continues and is only strengthening!
The growth journey!
IBISA began the operations of its first insurance product of excess rainfall for CLIMBS, for the Philippine market in Sep’21. This product was bought by 14 cooperatives across 15 different provinces of the Philippines. In this annual coverage, there were three payouts made, one in the month of Dec’21 and two in the month of Apr’22. The payout amount of USD 120k was given to 8 different cooperatives that were affected by the excess rainfall event in the 6 different provinces of the region.
The payout amount is released in a record time of less than 10 days!
Seeing the confidence in the product design, there was a demand from the cooperatives asking for another risk to be covered. This was excess wind speed. IBISA began its second year operations with CLIMBS and its cooperatives from Oct’22 and secured the cooperatives from the risks of excess rainfall and excess wind speed.
The result, CLIMBS saw a tremendous response in the uptake of the insurance policies with almost twice the premium collection from the previous year and doing an 8X growth in the number of cooperatives covered to nearly 107 cooperatives.
Since the launch of this product, three payouts have already been made. USD 28k has been paid out to 10 different cooperatives that are spread across 7 different provinces of the Philippines, after tropical depression MayMay in October 2022, severe tropical storm Paeng in October 2022 and severe floods in January 2023.
The story doesn’t end here!
With the recent partnership with the InsuResilience Fund (ISF), we started another project from Jan’23 onwards to scale the reach of the parametric products to 72,000 farmers by the end of 2024. And, we are also adding another product of lack of rainfall for the cooperatives. You can read more about our partnership with ISF over HERE.
|Use case date
Do you want a growth partner too?
If you are an insurance or reinsurance company looking for technical assistance to help you scale effortlessly and build innovative products, tools and platforms for onboarding and policy management support, you know where to find us! 😊
IBISA Network works together with different stakeholders in the agricultural ecosystem to bring resilience for farmers and businesses. This case study highlights a project with one of our partners, CLIMBS, a mutual insurer in the Philippines.