AXA Launches Innovative Insurance Shield for DRC Farmers

AXA, the global insurance giant, has introduced a novel insurance policy specifically designed for farmers in the Democratic Republic of Congo.

This programme, spearheaded by AXA Climate, aims to provide a financial shield for agricultural supply chains against the mounting threats of extreme weather conditions.

The scheme is a part of the National Agricultural Development Program (PNDA) and enjoys the support of the DRC's Ministry of Agriculture. It also has the backing of substantial global entities such as the World Bank and the Global Shield Financing Facility.

This initiative is particularly timely, as the debate around climate insurance heats up within sustainability and insurtech circles.

Escalating climate threats to food security

The DRC has faced worsening climate conditions over the past decades, with a staggering drop of about 40.79 mm per month per century in national rainfall since 1951.

This drastic change has adversely affected agricultural outputs, placing over 21.8 million individuals at a high risk of food insecurity caused by droughts and unpredictable weather patterns.

Addressing these challenges, the PNDA's objective is to revamp agriculture and enhance living standards for farmers within Kasaï, Kasaï-Central, and Kwilu provinces.

The newly launched insurance programme will cover up to 300,000 farmers across these areas, shielding them from the impacts of early and mid-season droughts alongside excessive late-season rains.

In instances of severe climatic events, the affected farmers will receive direct compensation payments, which could be up to US$100 per farm annually.

This amount represents 15-20% of an average farmer's yearly income, aimed at helping them purchase seeds and restart their agricultural activities.

Unlike conventional insurance models, this scheme promises direct payments without intermediaries or commission fees, ensuring prompt financial relief.

Parametric insurance powered by satellite data

Distinct from traditional indemnity-based insurance, which depends on the physical assessment of damage, this innovative product operates on parametric insurance principles.

It leverages satellite-derived rainfall data, primarily from TAMSAT and ERA5, to monitor rainfall thresholds. Once these pre-defined limits are surpassed, compensation processes are automatically initiated, providing almost instantaneous support to the farmers.

This insurance solution was developed collaboratively between DRC's Ministry of Agriculture, the Autorité de Regulation et de Control des Assurances (ARCA), the World Bank, AXA Climate, the World Food Programme and local insurance firms.

It will be distributed through a consortium led by Mayfair Insurance Congo SA, which includes several key insurance players in the region.

A stride towards bolstering agricultural resilience

The establishment of climate insurance is expected to cushion farmers financially but also motivate them to adopt farming techniques that boost productivity.

Jean de Dieu Mbey Bosimi, the National Coordinator of the PNDA at the Ministry of Agriculture, remarks: "This insurance will offer Congolese farmers essential protection against climatic risks, encouraging them to invest in ways that improve both their productivity and income."

Regulators, too, are optimistic about the transformative impact of this initiative on the DRC's insurance market. Alain Kaninda Ngalula, the Managing Director of ARCA, emphasised: “The launch of agricultural insurance marks a major leap forward for the insurance sector in the DRC.”

Insurance stakeholders involved in this programme also expressed confidence in its potential benefits.

Gaudens Kanamugire, the Managing Director of Mayfair Insurance Congo SA, stressed the company’s commitment to protecting farmers' livelihoods and establishing a culture of agricultural insurance locally.

This pioneering model ultimately aims to set the stage for the wider implementation of agricultural micro-insurance throughout the DRC, creating a robust framework for future resilience against the increasingly unpredictable nature of climate change.

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