Many businesses in the country face huge financial losses due to the vagaries of weather patterns but are not able to obtain at least some financial cover for these risks. Farmers are especially vulnerable due to the exposure of crops on which they depend on for their survival and sustenance.

The farmers can do little to control or limit the damage by adverse weather conditions since most conventional insurance products do not cover losses, or account for the disruption of economic activity. Some indemnity insurance products that are available usually cater for wealthy, urban dwelling customers, leaving low-income households behind.

It is for this reason that Sun Insurance believes that parametric insurance meets a critical demand. The company sees it as a way to protect the country’s vital but somewhat vulnerable agriculture sector, which is driven by farmers. The parametric insurance product provides immediate financial relief of up to FJ$1000 from cyclone damage. It would mean a quick cash flow for the farmers to reinvest, rebuild and recoup, without having to dip into their savings or take risky loans. It could ease the pain of a longer and more difficult recovery period.

For Sun Insurance, the parametric microinsurance product is one of the best products to come out the UN Capital Development Fund. It is an affordable and reliable insurance product for farmers, fishers, and market vendors, something that no one thought could be made available to this particular group. Sun Insurance feels that with the right marketing and awareness, many more low-income earners will opt for insurance coverage and benefit from this product, with spinoffs for the national economy as a whole.

However, there is room for the further development of the product to, among other things, change some negative perceptions about insurance. While the company did note incidents of negativity towards the product in its initial stages, on-the-ground consultation and awareness activities brought about a change in attitudes. This not only highlights the benefits of advocacy and outreach but emphasises why such efforts need to be ongoing.

Sun Insurance believes that the initial negative perception was becoming a thing of the past as the farmers were now more familiar with the benefits of cover, and considering insurance protection. Outreach, education and advocacy should also include conducting a post-disaster cost-benefit analysis, as well as conversations with the farmers in their respective languages, since parametric insurance is relatively new to them.

Product strengths, according to Sun Insurance, included but were not limited to farmers’ ability to access funds to re-start their farming business and easy cash flow to purchase food and other necessities. There is no need for claims reporting as the payment is sent to the bank account automatically within a few days, and no requirement to prove losses.

On the other hand, SUN Insurance noted that product weaknesses included limited trigger events for the cover, inability to offer cyclonic storm (wind and rain) cover to all parts of Fiji, limited peril and a perceivably low payout figure. Sun Insurance noted that insurance companies would not be able to offer extended covers unless there was reinsurance backing.

SUN Insurance is of the view that some of these early weaknesses will be addressed with time and product maturity. “The more the product grows, and an adequate premium pool is created, the more attractive it will become for the reinsurers, which in turn may attract extended cover. The initiative and solution to these could be funded by the government.”

In terms of product sustainability, Sun Insurance noted that the concept of insurance was all about quantity, premium pool and longevity. For an insurance product to be sustainable, it needs to grow and generate enough premium pool to sustain its losses over the long term.

Sun Insurance has taken ownership of activities by embedding them into its core values strategic plan, with a proposal put forward to their reinsurers to consider the product as it grows and develops out of the pilot product.

Highlighting major challenges, SUN Insurance shared that language barrier as a difficulty in reaching the masses, as well as farmers’ negative mindset about the benefits of investing in insurance. Sun Insurance also noted that farmers not being active members of any association or cooperative could pose a challenge to the sustainability of the product.

On a positive note, the product also presented untapped opportunities, such as extending cover to aquaculture farmers, horticulture, handicraft and schools. Sun Insurance believes that more awareness among grassroots communities could boost subscriber numbers.

“A quick and efficient claims service delivery will play the most important role in encouraging more members,” states Sun Insurance. “This can be influenced by adequate product awareness and on-ground visitations targeting the heavily-populated farming areas.”

Sun Insurance believes that women and disability groups that are involved with farming, fishing and selling in the markets are another potential target group. Having the government fund the insurance via welfare schemes and disability allowance, and reaching out to micro, small and medium enterprises (MSMEs), is also a viable consideration, states Sun Insurance.

The company hopes its partnership with UNCDF will culminate in increased awareness programmes in the community. It believes that strengthening marketing efforts is the key, and towards this end, roping in non-governmental organisations in awareness efforts could also raise the profile of the parametric microinsurance product.