Ecuador has contracted its first parametric agricultural insurance policies, benefitting up to 10,000 people in smallholder rice and maize farming households against extreme rainfall and drought-risk.

The placement of these policies in the Ecuadorian insurance market is a major milestone for the Tripartite Agreement Programme – a public-private partnership between the Insurance Development Forum ( IDF ), the United Nations Development Programme and the German Federal Ministry for Economic Cooperation and Development through the InsuResilience Solutions Fund – to build developing countries’ resilience to climate risk.

Ecuador’s agricultural sector is highly exposed to climate shocks, with more frequent and severe floods, droughts and wildfires causing significant crop losses in recent years. These events disproportionately affect Ecuador’s smallholder farmers, who make up 75% of all farmers in the country and are critical to domestic food security.

The Tripartite Agreement Programme’s Ecuador project, launched in 2023 and led by the Ministry of Agriculture, Livestock and Fisheries, has focused on developing parametric insurance solutions to enable automatic payouts triggered by excessive rainfall or prolonged drought exceeding predefined thresholds.

The parametric policies, now live, the ministry notes, are designed to deliver faster and transparent insurance payouts, helping farming families recover quickly from climate events and reinvest in subsequent planting cycles.

The two parametric products – for extreme rainfall and drought-risk – were designed by IDF member insurance organizations AXA Climate, Guy Carpenter México Intermediario de Reaseguro and Blue Marble, in partnership with the ministry and with local insurer Hispana de Seguros implementing the policies on the ground.

“These parametric insurance policies align with our commitment to provide smallholder farmers with tools that strengthen their sustainability, especially in the face of rising climate change challenges,” says Juan Carlos Vega, Ecuador’s minister of agriculture, livestock and fisheries. “It is a tool that financially protects them from climate risks and contributes to our country’s food sovereignty.”