How Is IBISA Enhancing Climate Resilience for Farmers in Asia and Africa?

June 27, 2024

IBISA, an insurtech company specializing in climate resilience through parametric insurance, has successfully raised $3 million in a funding round aimed at expanding its operations in Asia and Africa. This funding round was led by the Acumen Resilient Agriculture Fund (ARAF) and Equator, with notable contributions from Asian Development Bank Ventures (ADBV) and existing investors like Ankur Capital. The primary objective of this newly acquired capital is to enhance the accessibility of IBISA’s innovative insurance solutions, predominantly targeting the agriculture sector, which is severely affected by extreme weather events. According to the Food and Agriculture Organization of the United Nations, these adverse climatic conditions are responsible for global losses ranging between $10 billion and $15 billion annually.

The Role of Parametric Insurance in Climate Resilience

One of the standout features of IBISA’s offerings is their use of parametric insurance, which utilizes satellite and actuarial technologies to provide financial resilience against weather-related risks. Unlike traditional insurance policies that require extensive loss assessments and claim processes, parametric insurance pays out quickly when predefined criteria, such as rainfall levels or temperature thresholds, are met. This makes it an ideal solution for offering protection against exigencies like agricultural damage, typhoon-related losses, and even loan defaults for financial institutions. By focusing on these specific, measurable events, IBISA delivers timely relief and financial stability to those most affected by erratic weather patterns.Since 2023, IBISA has been concentrating its efforts on the Indian market, introducing innovative insurance products like heat stress insurance for dairy farmers. This particular insurance product addresses the rising temperatures that significantly impact dairy farming, causing a decrease in milk production and increased livestock morbidity. The positive reception and success in India have motivated IBISA to extend this offering to other countries in the region, including a recent rollout in Bangladesh. By leveraging advanced technologies and a deep understanding of local needs, IBISA has positioned itself as a vital player in fortifying climate resilience in the agricultural sector.

Strategic Expansion and Investment

IBISA’s CEO, Maria Mateo, emphasized that the new funding would be instrumental in developing additional insurance products and expanding further into emerging markets across Asia and Africa. She underscored the company’s agile approach towards product innovation, describing its current phase as one focused on industrialization. This involves not just broadening the range of insurance products but also optimizing the technological and operational efficiencies required to serve new and existing markets effectively. Backed by both new and existing investors, IBISA is set to explore diverse avenues for growth, ensuring that its solutions remain accessible and affordable for those who need them the most.ARAF, a $58 million impact fund, has been a significant supporter in this venture. The fund is dedicated to building climate resilience among smallholder farmers by making equity investments in agricultural enterprises aimed at climate adaptation. Tamer El-Raghy, ARAF’s managing director, highlighted the critical need for cost-effective parametric insurance in African regions, where farmers are often the most vulnerable to climate change. He praised IBISA’s technology for its capability to develop insurance products that can mitigate these adverse effects, providing a sustainable solution for smallholder farmers facing increasingly unpredictable weather conditions.

The Role of Venture Capital and Emerging Markets

IBISA’s CEO, Maria Mateo, highlighted that the new funding will be crucial for developing new insurance products and expanding further into emerging markets in Asia and Africa. She emphasized the company’s agile product innovation approach, describing the current stage as one focused on industrialization. This phase involves broadening the insurance product range and optimizing technological and operational efficiencies to effectively serve new and existing markets. Supported by both new and existing investors, IBISA aims to explore various growth avenues, ensuring that its solutions remain accessible and affordable to those in need.ARAF, a $58 million impact fund, has been a key supporter in this venture. This fund is focused on fostering climate resilience among smallholder farmers by making equity investments in agricultural enterprises designed for climate adaptation. Tamer El-Raghy, ARAF’s managing director, emphasized the urgent need for cost-effective parametric insurance in African regions, where farmers are particularly vulnerable to climate change. He lauded IBISA’s technology for developing insurance products that mitigate adverse effects, providing a sustainable solution for smallholder farmers facing unpredictable weather conditions.

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