Australian insurtech firm Hillridge has partnered with Vietnam's Bao Minh Insurance to offer Typhoon Index Insurance, a Vietnam-first new parametric product to protect Vietnamese acacia timber farmers from the nation’s devastating typhoons.
Powered by Hillridge’s platform, Typhoon Index Insurance is based on a simple, online purchasing process that will typically see farmers, plantations, and agribusinesses receive reimbursement from Bao Minh for damage to their crops, plantations or livestock within 10 days. Payouts are calculated by a satellite-based system that measures the severity of a typhoon and the distance of a farm from that storm, according to Hillridge.
“Unlike traditional indemnity-based insurance, where payouts are determined through a damage assessment that can see cumbersome processing times and delayed claims, parametric insurance pays out – typically within 10 days – based on a transparent, predetermined calculation,” explained Hillridge CEO Dale Schilling.
Nguyen Ngoc Anh, Bao Minh Insurance’s executive vice president, said: “This means that Vietnam’s farmers are quickly able to replenish their stocks and replant their crops, rather than waiting for a prolonged assessment and claims period that delays their ability to revitalize their livelihoods once the storm has passed.”
Schilling said that Vietnam, which has an annual typhoon season that stretches from June to November, typically sees four to six major tropical storms hit its shores each year, and has a particularly vulnerable agriculture sector which is frequently devastated when these storms strike land.
For example, 2017’s typhoon Damrey saw VND22 trillion (roughly $1 billion) of economic damage to farmers, notably in forestry, agriculture and aquaculture. Vietnam is particularly susceptible to weather volatility, and that further increases the risks that Vietnamese farmers find themselves living with, added Schilling.
Alarmingly, less than 5% of farmers nationwide are insured against this kind of adverse weather events. The system relies upon satellite-based weather monitoring from the University Corporation for Atmospheric Research (UCAR), which is sponsored by U.S. government agency the National Science Foundation, coupled with classifications defined by the Vietnam Meteorological Hydrological Administration.
Based upon this data, Hillridge’s award winning system processes claims based on typhoon windspeeds and distance (within 100 km) from the insured farmer.
At a ceremony held in HCMC earlier this week, attended by representatives of USAID's Sustainable Forest Management Project, Hiep Thuan Agricultural Cooperative became the new product’s inaugural customer.
The cooperative’s representative Nguyen Huu Duong inked a deal with Bao Minh’s Nguyen Ngoc Anh to insure farmers in the Quang Nam province-based cooperative against adverse weather incidents and the impacts of longer-term climate change. USAID is supporting the first year of the insurance’s implementation, along with other technical assistance to Hiep Thuan.
“We believe that with this insurance policy, especially with technical assistance from USAID, we can help 40 forest owners cover 154.46 hectares of acacia plantation forest under improved forest protection practices, create peace of mind for forest owners to develop local material areas, and increase market access for our timber,” Duong said.
Duong added that the cooperative will strengthen the communication to forest owners in the area to attract community participation to continue expanding insurance coverage to the remaining 1,200 hectares of the cooperative.