Cooperation in action

Developing the insurance market in India, Zambia and Paraguay

Petrol station for cars and tuktuks in New Delhi, India


Under InsuResilience, an innovative pilot project is being planned in the Indian State of Tamil Nadu. It will combine natural disaster insurance with a savings plan component and with basic health insurance. This is an attractive product for rural clients because it can help them achieve and protect their life goals (such as building a home and giving their children an education) by taking out coverage against sudden challenges such as illness and natural disasters.

The natural disaster insurance protects both assets and income, an innovative feature. This product will benefit mainly labourers and micro entrepreneurs such as shop owners, as well as farmers. The product will be sold and administered by a microfinance institution with numerous branch offices and many clients all across India. Currently, the design of the product is being discussed with Indian primary insurance companies. In parallel, InsuResilience is working with the German Aerospace Center (DLR) on designing flood insurance for poor rural people in India on the basis of remote sensing technology. Once the pilot phase has been successful, this sustainable climate risk insurance product is to be expanded to cover other regions of India as well.


In Zambia, about two thirds of the workforce work in the agricultural sector. Most farmers are smallholders who have few resources to increase productivity and hedge production risks. Weather insurance can help them to better manage risks. The InsuResilience initiative seeks to address this by supporting the sustainable development of the agricultural insurance market in Zambia.

Since 2016, the BMZ has been financing activities in Zambia geared towards strengthening the insurance model of NWK Agri-Services, a cotton company; ensuring that the model is sustainable; and exploring avenues for spreading it throughout the country. The NWK insurance model shows that index-based weather insurance can be a sustainable business model. The BMZ project, which is implemented by GIZ, supports efforts to enhance the model, disseminate it and encourage other companies to adopt it. The activities are geared towards strengthening the business model and creating market confidence through the provision of training and better information for farmers and through publicity campaigns. In the long term, these efforts are intended to get other agri-businesses within Zambia and beyond to adopt this insurance model for their contract farming activities.

NWK Agri-Services, a Zambian agricultural enterprise that is active in contract cotton farming, has been offering index-based weather insurance to its small farmers since 2013/14. Based on satellite data, coverage is provided for risks posed by dry spells, droughts and heavy rains. In addition, clients can take out life insurance. This voluntary insurance scheme does not require subsidies for premiums. Under a contract farmer model, NWK advances the premiums for the smallholders, together with other agricultural inputs. The farmers, in turn, make a commitment to sell their cotton to NWK at the end of the season. Their earnings from the sale of the cotton and the potential disbursements from the weather insurance are used to pay off the loan. Surpluses are paid out directly to the farmers. During the 2015/16 season, 52,000 of 70,000 small farmers decided to buy the NWK insurance package. In 2016, after a major drought, more than 23,000 small farmers received payments totalling more than 200,000 US dollars.

Insurance gives people a chance to take action to make provision for risks, especially if they understand the products well. The support provided by the BMZ helps to strengthen people's understanding of the insurance products and their confidence in these products, and it helps to build an inclusive financial system. Farmers are satisfied with the insurance products on offer and value them. The NWK product enables smallholders to take greater risks and grow more cotton. This confidence has translated into bigger volumes of cotton that NWK can buy, thus also strengthening the company's business model. The goal of the support provided by the BMZ is stable market development that contributes to sustainable growth and employment.


In eastern Paraguay, InsuResilience supports a project for the development of innovative index-based weather insurance products on the basis of satellite data. The project is intended to protect the clients of a Paraguayan microfinance institution against extreme weather events such as drought and heavy rainfall. The insurance is combined with loans and sold to maize and soya farmers. The microfinance institution has a broad client base and many local staff and branch offices. The insurance model is being developed together with national institutions and private players. The product is to be finalised in the second half of 2017 so that it can first be offered in specific Departamentos and later in other regions as well.

BMZ glossary

Close window


Share page