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Jun 06, 2023 / 20:06

Drought insurance for Vietnamese farmers launched

The Australian insurtech startup made inroads into Vietnam's agricultural insurance sector, aiming to insure farmers against Southeast Asia's volatile weather.

Hillridge and Mitsui Sumitomo Insurance Group (MSIG) Vietnam entered into a partnership on June 6 to launch a first-of-its-kind insurance product to protect Vietnamese farmers against drought.

 Delegates attend the signing ceremony of the event. Photo: Hillridge

The new product is based on Hillridge's acclaimed platform and is underwritten by MSIG. The platform allows farmers to go directly online and receive real-time drought quotes. Any farm at risk of drought can purchase coverage through the platform.

An agreed payout is determined prior to the start of the insurance. If the conditions of the policy are met, payouts are made accordingly - simplifying the process for both the insured and the insurer.

Commenting on the product's launch at a June 6 ceremony in Hanoi, Hillridge CEO Dale Schilling said: "2023 has proven to be a prescient year for us to launch this product, with El Niño threatening dry conditions for much of Vietnam."

The company has recently visited many coffee-growing areas in Vietnam's Central Highlands, where farmers shared how droughts have historically caused their crops to fail - severely impacting their harvest, yields, and livelihoods. There is a growing need for farmers to insure themselves against the impact of such adverse conditions, he stressed.

The company plans to use its product in the Central Highlands first and then expand to other regions, he told The Hanoi Times. "We have received support from the government and local partners over time, and we will consider developing the product in the central, southern, and northern regions based on our sales."

He believes that similar products will become an increasingly important part of the operations for Vietnam's farmers, who will ultimately need to protect their livelihoods against the increasing weather volatility that rising global temperatures, rising sea levels, increasing salinization of waterways, and more frequent droughts will bring.

Speaking at the event, Nguyen Thi Lan Phuong, Deputy General Director of MSIG Vietnam, said that agriculture is a key area where the company can expand its already broad product portfolio.

"With nearly 40% of Vietnam's land used for agricultural purposes and for the sustainable growth of a sector that accounts for nearly 13% of GDP, I believe this product will be the best shield for farmers to protect what is important to them," she added.

The Vietnamese Government has also recognized the urgent risk that an El Niño drought poses to its agricultural sector, and in May, sent a delegation to the central province of Quang Nam to report on the crop risk between now and the end of the year. It reported a 70-80% probability of further drought in the central province between late summer 2023 and early 2024.