Mitsui Sumitomo Insurance Group (MSIG) Vietnam and Australian insurtech startup Hillridge on Tuesday inked a partnership that sees the latter enter Vietnam's agricultural insurance sector with a new product that will protect farmers from the risks of drought.
The new product, powered by Hillridge's platform and underwritten by MSIG, insures Vietnamese farmers against the volatility of the Southeast Asian climate.
At the signing ceremony, Hillridge CEO Dale Schilling said: "2023 has proven to be a prescient year for us to launch this product, with El Nino threatening dry conditions for much of Vietnam.
"We recently visited many of the coffee growing areas in Vietnam's Central Highlands, where farmers shared how droughts have caused their crops to fail in the past, greatly impacting their harvests, yields, and ultimately their livelihoods.
"Farmers have an increasing need to insure themselves against the impact of these kinds of adverse conditions," he said.
His co-signatory, MSIG Vietnam Deputy CEO Nguyen Thi Lan Phuong, said that the Japanese insurance giant, with its 14-year history in Vietnam, also sees the agriculture sector as a key area in which it can expand its already broad product portfolio.
"This is the first agri-insurance product that we have launched in Vietnam, where it joins our extensive portfolio of products that we offer here, including personal insurance such as personal accident, healthcare, travel, home and motor insurance, and liability and property insurance in various sectors," she said.
Phuong elaborated that almost 40% of the land in Vietnam is used for agricultural purposes, and agriculture accounts for almost 13% of the country’s GDP.
The Vietnamese government has also recognized the urgent risk that an El Nino drought represents to agriculture. It dispatched a delegation to Quang Nam province in May to report on the risks to crops between now and the year-end. It reported a 70-80% probability of further droughts in the central province between late summer and early 2024.
The Hillridge platform is the first in Vietnam to enable farmers to go online and generate quotes against drought in real-time. Any agricultural business susceptible to drought can buy coverage through the platform, according to the Australian startup.
An agreed payout is determined before the commencement of the insurance, and when the policy's conditions are met, payouts are made accordingly, simplifying procedures for both the insured and the insurer.
The deal is an extension of a successful partnership between the two firms in Australia, where Hillridge and MSIG teamed up in 2021 to protect Australian farmers against adverse climate events.
Australian native Schilling said: "Products like this will become increasingly an essential part of operations for Vietnamese farmers, who will ultimately need to protect their livelihoods against the increasing weather volatility that rising global temperatures, climbing sea levels, increasing salinization of waterways, and more frequent droughts are set to deliver."
El Nino is a climatic phenomenon characterized by the abnormal warming of the Pacific Ocean, resulting in significant disruptions to weather patterns worldwide.