The InsuResilience Solutions Fund (ISF) is co-financing the development and implementation of a national parametric insurance scheme designed to protect coffee and cocoa farmers in Indonesia from the escalating risks of climate change.
The program is a collaboration with London-based insurtech Blue Marble Microinsurance and state-owned insurance provider PT Asuransi Jasa Indonesia (JASINDO). The Indonesian Ministry of Agriculture represents the demand side of the partnership.
Indonesia is one of the world’s largest coffee and cocoa producers, but extreme weather events such as frequent floods, storms, landslides and droughts have disrupted the livelihoods of 2.3 million smallholder farming families.
The impacts of climate change, including rising temperatures, erratic rainfall, prolonged droughts and pests and diseases, have significantly reduced crop yields, jeopardizing farmers’ economic stability and harvest quality.
The project aims to provide a financial safety net that stabilizes farmers’ incomes and prevents households from falling into poverty due to climate-related harvest failures through tailored, data-driven coverage.
Unlike traditional insurance, which requires manual loss assessment, this parametric solution uses satellite data to trigger automatic payouts based on specific environmental conditions.
These insurance products provide protection against drought and excess rainfall, tailored to the specific risks and harvest calendars of different regions.
Farmers can choose basic coverage or additional protection for specific stages of crop production, ensuring flexibility and relevance to their needs.
The product development process includes submitting the insurance design for regulatory approval by the Indonesian Financial Services Authority (OJK), as well as mobilizing local and international reinsurance capabilities.
At the national level, JASINDO will underwrite and manage insurance products in accordance with Indonesia’s reinsurance requirements. Internationally, additional risk-sharing support will be provided by Blue Marble’s network of reinsurers, including Aspen, ASSA, MAPFRE, TransRe and Zurich.
The Ministry of Agriculture and its provincial Dinas Petagna office will lead distribution, leveraging its established network previously used for rice and livestock insurance.
Payments will be facilitated through two potential channels. The first involves direct payments to farmers through bank accounts, farmer cards (Kartu Tani) or group accounts.
The second channel is through loan integration with the Kredit Usaha Rakyat (KUR), a government-backed people’s commercial loan scheme for SMEs, in which insurance proceeds first repay outstanding debt and then transfer the remainder to farmers.
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