Today’s multi-crisis context underlines the need for rural resilience. Ramping up the capacity of rural people to manage risks, and prepare for and recover from shocks is essential to eradicating rural poverty and ensuring no one is left behind.

Agricultural insurance and climate risk insurance can help break the vicious cycle of shocks, indebtedness and poverty that prevent small-scale producers from improving their lives. When used holistically with other tools to manage agricultural risks, insurance enables farming families to produce, earn and invest more, building their resilience.

Insurance can de-risk investment by transferring otherwise unmanageable risks away from farmers as well as the businesses and institutions that serve their communities. In this way, rural economies are stabilised and safeguarded against shocks.

While agricultural and climate risk insurance is widely available in developed countries, there is a huge protection gap in rural areas of the developing world where it is needed most.

Insurance does more than build resilience

IFAD has been working on agricultural and climate risk insurance since 2008. From 2018, IFAD’s agricultural and climate risk insurance programme, INSURED, has been integrating insurance into IFAD programmes by bundling insurance with other products, including farming inputs and loans. This creates better value for the clients and helps make rural people a less risky investment.

By integrating insurance, development programmes can forge stronger links with the private sector which, in turn, improves access to insurance while supporting better agricultural productivity and strengthening food security. Crowding in insurers to development programmes can also help develop sustainable markets and encourage investment in rural areas.

However, providing insurance alone is not enough. It must be combined with education and technical assistance for all stakeholders, including producers, farmers’ groups and insurance companies. To help achieve this, the Insurance Toolkit supports insurance workstreams and training.

INSURED is implemented by the multi-donor Platform for Agricultural Risk Management (PARM) and is funded by Sida.