WRMS Global

Case Study

Weather Index Insurance for Honduran Farmers

THE CHALLENGE

Honduras relies heavily on agriculture, but climate risks increasingly threaten key export crops like coffee, sugarcane, tomato, and corn. Smallholder farmers, who are the backbone of this sector, face constant threats from extreme weather events like tropical cyclones and droughts. With crop failures and financial losses always looming, many farmers struggle to sustain their livelihoods. The lack of protection and inclusive support programs makes it clear: there’s an urgent need for innovative solutions to strengthen climate resilience and secure their future.

THE APPROACH

UPL, in collaboration with WRMS, developed a Weather Index Insurance (WII) product tailored to the needs of Honduran farmers. This parametric solution provides coverage based on predefined weather events like excess rainfall and drought which eliminates the need for on-site loss assessments. The product uses real-time data from satellites and weather stations to trigger automatic payouts as soon as climate thresholds are breached to ensuring fast financial payouts.

By integrating the WII product with UPL’s agricultural inputs, farmers receive comprehensive support during crop losses with need seed inputs without additional costs. To reduce the basis risk, the insurance model is calibrated to local weather conditions for accurate payouts. The partnership connects with local intermediaries to ensure farmers have access to credit, allowing them to invest in their crops without the fear of financial loss and new technology adoption.

The Solution

Parametric Insurance Model

The WII product provides event-based coverage, with automated payouts triggered by specific weather conditions. This approach simplifies claims processing and ensure because of absence of on-site loss assessments.

Comprehensive Coverage

The insurance covers both excess rainfall and drought conditions to protect investments across crop cycles reducing risk exposure.

Automated Payouts

Real-time data triggers automated payouts, ensuring fast financial relief without lengthy claims procedures.

Embedded Offering

Combining insurance with UPL’s agricultural inputs creates a holistic solution that boosts productivity while mitigating climate risks.

The Impact

The WII program provided essential financial protection to smallholder farmers, enabling them to maintain productivity during extreme weather events. Quick payouts reduced vulnerability and promoted sustainable farming practices. By addressing the protection gap, the program contributed to long-term economic stability in Honduras’ agricultural sector.

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