Page 47 - The Insurance Times August 2025

This design ensures that coverage is affordable, automatic, and
timely, eliminating the need for claim filing or field verification.

Real-World Impact
The relevance of the product was validated during the 2024
dry season, when a severe drought lasting over 80 days hit
key vegetable-producing areas. The drought triggered
Cambodia's first-ever microinsurance payout for vegetable
farmers, with claims settled in April 2024. Notably, 68% of
insured farmers were women, underscoring the importance
Picture (own) : A regional training on Inclusive Insurance in of gender-responsive approaches in risk protection.
Siam Reap Province for Chamroeun Microfinance & Prévoir
Microinsurance Team

Product Coverage and Claim Mechanism
The product provides drought risk coverage specifically for
dry season vegetable farming, with the coverage period
spanning from 1st January 2024 to 31st March 2024 (inclu-
sive of both dates).

Picture from Chamroeun Microfinance Team : A woman
farmer receiving her insurance payout using biometric veri-
fication from Kampong Thom Province, Cambodia

Toward Scalable Climate-Resilient Fi-
The index-based payout mechanism works as fol-
lows: nance
The vegetable insurance pilot is a key component of
If the cumulative rainfall during the insured period is
below a predefined trigger level (measured in millime- Chamroeun's broader strategy to strengthen inclusive
ters), the farmer receives a payout. financial services for Cambodia's most climate-vulnerable
communities. Alongside credit, microinsurance is
The trigger levels were set at the commune level, emerging as a vital response to climate-related and
based on historical weather data and validated through microeconomic shocks that threaten the stability of small-
actuarial modeling.
holder households.
Satellite rainfall data from CHIRPS (Climate Hazards
Group InfraRed Precipitation with Station data) is used A critical and often overlooked challenge for farmers dur-
to measure actual rainfall. ing drought is the surge in irrigation costs. Vegetables-and
For every 1 mm deficit below the trigger threshold, the many other crops-require significantly more water during
payout increases at a predetermined rate (%), ensur- extended dry periods, leading farmers to spend heavily on
ing transparency and objectivity. irrigation just to sustain their yields. These additional ex-
penses often go unaccounted for, but by the end of the sea-
The payout table, rates, and thresholds were custom-
ized to reflect local weather risk patterns and farmers' son, they erode profit margins and can turn what would be
capacity to absorb shocks. a productive harvest into a financial loss.

42 August 2025 The Insurance Times