Pembroke, Bermuda-based special insurance company and reinsurer Sompo International Holdings Ltd. and Stuttgart, the German insurance company SV SparkassenVersicherung on Wednesday, launched a parametric insurance product to protect German farmers exposed to harvest losses due to extreme weather.
An index-based product, SV ErnteIndex pays out based on a 10-year average yield index for the district in which the farm is located, as well as return and market price forecasts that the farmer chooses when buying quilts, the companies said in a joint statement.
The parametric protection is designed to complement traditional loss-based crop insurance and protects German farmers against crops caused by drought, heavy frost or prolonged wet weather, the statement says.
Usually, coverage covers lasting for one year and can be used for a wide range of conventional and organic crops, the statement says.
The parametric cover provides significant unlimited ca pacity said a Sompo International spokesman.
Sompo International offers a similar parametric crop protection to farmers around the world, said the spokesman.
"This product offers German farmers a simple but effective insurance protection to protect their crops. During catastrophic years like 201