Liberty Mutual Re Launches Innovative Insurance for Colombian Farmers Facing Climate Risks

Liberty Mutual Reinsurance (LM Re), the reinsurance division of Liberty Mutual, has introduced a new parametric insurance product tailored to safeguard Colombian farmers from the impacts of floods and droughts—two persistent climate threats that continue to damage the nation's agricultural sector.

This new initiative is the result of a collaboration with XS Latam (part of XS Global Group) and SFA CEBAR, expanding on a drought-specific pilot program LM Re implemented last year. The offering also integrates technology from Floodbase, a parametric flood specialist, and EarthDaily, a provider of geospatial data.

LM Re has built a strong presence in parametric and agricultural insurance, offering index-based solutions aimed at helping clients withstand natural disasters, extreme weather, and non-physical business disruptions. Its Agriculture & Parametrics team manages a global portfolio that includes coverage for hail, multi-peril crops, aquaculture, forestry, and livestock, available through both treaty and facultative arrangements.

With the latest launch, LM Re’s coverage now includes both flood and drought risks. A key feature is the use of advanced flood mapping and data-driven trigger mechanisms, which allow for rapid payouts to insured farmers when predefined conditions are met.

Importantly, the product addresses a major obstacle to parametric insurance in Colombia: frequent cloud cover that hampers satellite monitoring. LM Re has developed a system capable of capturing daily index data, improving the reliability and long-term sustainability of parametric insurance in areas with heavy cloud interference.

Jean-Christophe Garaix, LM Re’s Head of Agriculture and Parametrics, explained the broader impact of the product: “Colombian farmers often rely on annual loans to finance their crops. When extreme weather causes losses—such as losing a herd—many are forced to sell land to repay debt. This insurance solution helps mitigate those risks, making agriculture more resilient.”

He added that reducing weather-related risks not only supports farmers but also encourages banks to offer financing with lower interest rates, fostering a more robust and sustainable farming economy in Colombia.

Given the country’s diverse landscape, Colombia’s farming industry is highly exposed to climate extremes. For instance, widespread flooding in November 2024 devastated numerous farms, and over the past ten years, the nation has experienced some of its most severe droughts on record.