Mexico has experienced a dramatic rise in climate-related disasters in recent decades, with particularly severe consequences for its agricultural sector. Government data reveals that over 80% of economic losses from weather-related disasters since 2000 have affected agriculture. In southern Mexico, 87% of maize farmers report significant climate impacts, with smallholder farmers on non-irrigated lands being especially vulnerable to crop losses from floods and droughts.
In response to these challenges, Mexico's government launched an innovative parametric insurance program in 2022 through its Tripartite Agreement partnership. Developed jointly with the Secretariat of Treasury and Public Credit (SHCP) and the Secretariat of Agriculture and Rural Development (SADER), the program initially protected over 10,000 smallholder farmers against climate shocks. Additionally, during the pilot, the company Raincoat provided the IT insurance platform for beneficiary data management.
First, the parametric excess rain-fall and drought are tracked via satellite so rates and triggers are agreed in advance, with fast and direct pay-out without loss adjustment. The total sum insured per hectare is approximately 100 USD (maximum payout of ~500 USD per farmer) and the state insurance company Aseguradora Agropecuaria Mexicana (AGROSEAMEX) is then responsible for managing claims and payments to farmers.
While in its pilot phase, the insurance triggered payouts to more than 1,400 producers following extreme weather events, providing critical support for livelihood recovery and community resilience. The project was then broadened and now insures a total of 10,000 beneficiaries, with plans to reach 200,000 in the future granted it gets national support.
Building on this success, the SHCP has incorporated the pilot results into formal proposals for federal budget allocations to expand the program in 2024. The Insurance and Risk Finance Facility (IRFF) plays a key role in this process, advising the Mexican government on integrating risk transfer mechanisms into national climate adaptation and development strategies. The IRFF's technical assistance extends to gender-sensitive programming, including specialized financial literacy training and policy development support to promote women's participation in risk management systems.
This program exemplifies the Tripartite model's three-pronged approach: strengthening insurance market foundations, co-designing risk finance solutions with private sector partners, and building government capacity for scaling climate resilience measures. Beyond the parametric insurance product, UNDP supports Mexico in developing regulatory frameworks, building technical expertise, and aligning risk finance strategies with biodiversity conservation goals - creating a comprehensive approach to climate adaptation in the agricultural sector.
This initiative forms part of the broader Tripartite Agreement between UNDP, Germany's Federal Ministry for Economic Cooperation and Development (BMZ), and twenty global insurers under the Insurance Development Forum. Operating across twenty countries, the partnership has mobilized $5 billion in risk coverage for 64 million vulnerable people worldwide.
The parametric insurance program in Mexico currently covers over 10,000 smallholder farmers against floods and droughts through its sovereign risk transfer solution, with plans of expansion to 200,000 beneficiaries. During the pilot phase, the coverage was triggered twice, enabling direct payments to more than 1,400 affected producers to strengthen climate resilience. The United Nations Development Program projects that a total 3.7 million poor and vulnerable people will be reached indirectly by this project by its completion, protecting them against harvest shortfall losses due to drought or uneven rainfall.
The United Nations Development Program projects a total cost of € 4.4 million ($4.7 million USD) over the timeline of March 2022 to March 2025. The enrollment cost of the project was approximately $600 MXN ($32 USD) per producer.
Multi-level governance: The Insurance Development Forum (IDF), the Ministry of Treasury and Public Credit, the German Government and the United Nations Development Programme (UNDP) developed this parametric insurance program for small producers that are vulnerable to climate events as partners. The insurtech company Raincoat provided the IT insurance platform during the project roll-out phase. In parallel to this, UNDP offered technical and coordination assistance to both help deliver on the industry-led risk financing solution and combine that with long-term investments to integrate risk-financing and insurance into national development strategy and delivery.
This is the first country project to be launched in 2022 under the Tripartite Agreement announced in 2019 between the German Federal Ministry for Economic Cooperation and Development (BMZ), the IDF and UNDP, to deliver technical assistance and risk financing solutions to twenty countries vulnerable to climate change by 2025. The InsuResilience Solutions Fund (ISF), funded by the KfW Development Bank on behalf of BMZ, is co-funding the implementation of the programme alongside the IDF insurance industry members.
Claim manager and payment deliverer - AGROASEMEX (Aseguradora Agropecuaria Mexicana) official website linked to Ministry of Agriculture’s farmer registry (RAN): https://www.agroasemex.gob.mx
Plataforma Nacional de Transparencia - Mexico’s national government transparency portal: https://www.plataformadetransparencia.org.mx/Inicio
Plataforma Nacional de Datos Abiertos - https://www.datos.gob.mx/
Agriculture Insurance for Smallholder Farmers in Mexico. (United Nations Development Program (UNDP), 2023.)
Findings:
- The pilot project was focused on 11 municipalities of 4 states in Mexico. Its objective was to enroll close to 10,000 small producers, and it managed to achieve 94.1% of this goal, which represents 24,240 hectares farmed. About 60% of the beneficiaries (55% men and 73% women) are financially included, which means that they have a financial account were money can be transferred.
- 95% of the small producers were enrolled in communitarian events and 5% in their homes. The enrollment process considered the hiring of women enrollers (42%), the promotion in rural communities via local communications means, and indigenous translation in some municipalities. Also, Raincoat designed a mobile application (app) that was simple and agile for this process and that could be used even without any connectivity. The insurance was activated in two municipalities because of excessive rainfall.
- The coverage was triggered twice during the pilot test, and over 1,400 producers received a direct payment to make their livelihoods and communities more resilient against climate change. From the small producers that were benefited by the insurance, 95% assure that they are satisfied by the product; and 100% of the women that were beneficiaries declared that they would renew the insurance product. This project is expected to be scaled to 100 municipalities in 19 states with more than 200,000 small producers.
Press release: Tripartite Project Launched in Mexico by Ministry of Finance and Public Credit, the IDF, UNDP and the German Government, to develop an insurance programme to protect climate vulnerable farmers – Insurance Development Forum, Mexico City, Mexico / London, UK, 24 March, 2022.
Key Points:
- 80% of the total number of farmers in Mexico are small farmers (owning less than 5 hectares), and most of them cultivate on non-irrigated lands, making them relatively more exposed to weather shocks. Of these farmers only 18% have access to formal credit and, thus, commercial agriculture insurance. This programme also has other benefits including that these farmers will not only have ready access to finance, but they will also receive timely weather forecasts. While insurance offers peace of mind against risks, the project has a long-term focus that is to improve the livelihoods and build up the resilience of Mexico’s small holder farmers.
- Through the IDF Tripartite projects, the insurance industry is delivering on its responsibility to help developing countries vulnerable to climate change protect their hard-earned development gains, while using risk financing tools to increase their financial, physical, as well as social resilience.
- Insurance and risk finance can offer security and greater resilience to the vulnerable sections of our society. In the long run such mechanisms sustain the population’s welfare and increase ex-ante risk management, which in turn results in more savings. This frees capital for other critical investments.
● Community engagement is critical: The high enrollment rate (94.1%) was achieved through in-person outreach, including home visits and local events, with special attention to gender inclusion (42% women enrollers) and indigenous language accessibility.
● Digital tools enhance efficiency: The mobile application enabled seamless enrollment even in low-connectivity areas, proving essential for reaching remote smallholder farmers.
● Gender-sensitive design improves adoption: 100% of women beneficiaries expressed willingness to renew coverage, highlighting the value of tailored financial products for marginalized groups.
● Sovereign partnerships enable scale: Collaboration between government (SHCP, SADER), insurers, and UNDP allowed rapid pilot testing and laid the groundwork for future national expansion to 200,000 farmers.
● Parametric triggers ensure timely support: Automatic payouts during extreme weather events demonstrated the model’s effectiveness in delivering rapid relief to 1,400+ farmers.
Tripartite Agreement: https://undp-irff-uat.assyst-uc.com/projects/tripartite-agreement
SDG 1: No Poverty
- Target 1.5: By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters.
- Indicator 1.5.1: Number of deaths, missing persons and directly affected persons attributed to disasters per 100,000 population
- Indicator 1.5.2: Direct economic loss attributed to disasters in relation to global gross domestic product (GDP)
SDG 2: Zero Hunger
- Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality.
- Indicator 2.4.1: Proportion of agricultural area under productive and sustainable agriculture
SDG 5: Gender Equality
- Target 5.a: Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws.
- Indicator 5.a.1: (a) Proportion of total agricultural population with ownership or secure rights over agricultural land, by sex; and (b) share of women among owners or rights-bearers of agricultural land, by type of tenure
- Indicator 5.a.2 Proportion of countries where the legal framework (including customary law) guarantees women’s equal rights to land ownership and/or control
SDG 8: Decent Work and Economic Growth
- Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.
- Indicator 8.10.2: Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider
SDG 10: Reduced Inequalities
- Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.
- Indicator 10.4.1: Labour share of GDP, comprising wages and social protection transfers
SDG 13: Climate Action
- Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
- Indicator 13.1.2: Number of countries that adopt and implement national disaster risk reduction strategies in line with the Sendai Framework for Disaster Risk Reduction 2015-2030
- Indicator 13.1.3: Proportion of local governments that adopt and implement local disaster risk reduction strategies in line with national disaster risk reduction strategies
- Target 13.3: Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impa ct reduction and early warning.
- Indicator 13.3.1: Number of countries that have integrated mitigation, adaptation, impact reduction and early warning into primary, secondary and tertiary curricula
SDG 15: Life on Land
- Target 15.3: By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, drought and floods, and strive to achieve a land degradation-neutral world.
- Indicator 15.3.1: Proportion of land that is degraded over total land area
SDG 17: Partnerships for the Goals
- Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources.
- Indicator 17.16.1: Number of countries reporting progress in multi-stakeholder development effectiveness monitoring frameworks that support the achievement of the sustainable development goals
- Target 17.17: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.
- Indicator 17.17.1: Amount of United States dollars committed to public-private and civil society partnerships
SDG 1: No Poverty
- Target 1.5: By 2030, build the resilience of the poor and those in vulnerable situations and reduce their exposure and vulnerability to climate-related extreme events and other economic, social and environmental shocks and disasters.
- Indicator 1.5.1: Number of deaths, missing persons and directly affected persons attributed to disasters per 100,000 population
- Indicator 1.5.2: Direct economic loss attributed to disasters in relation to global gross domestic product (GDP)
SDG 2: Zero Hunger
- Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices that increase productivity and production, that help maintain ecosystems, that strengthen capacity for adaptation to climate change, extreme weather, drought, flooding and other disasters and that progressively improve land and soil quality.
- Indicator 2.4.1: Proportion of agricultural area under productive and sustainable agriculture
SDG 5: Gender Equality
- Target 5.a: Undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance and natural resources, in accordance with national laws.
- Indicator 5.a.1: (a) Proportion of total agricultural population with ownership or secure rights over agricultural land, by sex; and (b) share of women among owners or rights-bearers of agricultural land, by type of tenure
- Indicator 5.a.2 Proportion of countries where the legal framework (including customary law) guarantees women’s equal rights to land ownership and/or control
SDG 8: Decent Work and Economic Growth
- Target 8.10: Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all.
- Indicator 8.10.2: Proportion of adults (15 years and older) with an account at a bank or other financial institution or with a mobile-money-service provider
SDG 10: Reduced Inequalities
- Target 10.4: Adopt policies, especially fiscal, wage and social protection policies, and progressively achieve greater equality.
- Indicator 10.4.1: Labour share of GDP, comprising wages and social protection transfers
SDG 13: Climate Action
- Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries.
- Indicator 13.1.2: Number of countries that adopt and implement national disaster risk reduction strategies in line with the Sendai Framework for Disaster Risk Reduction 2015-2030
- Indicator 13.1.3: Proportion of local governments that adopt and implement local disaster risk reduction strategies in line with national disaster risk reduction strategies
- Target 13.3: Improve education, awareness-raising and human and institutional capacity on climate change mitigation, adaptation, impa ct reduction and early warning.
- Indicator 13.3.1: Number of countries that have integrated mitigation, adaptation, impact reduction and early warning into primary, secondary and tertiary curricula
SDG 15: Life on Land
- Target 15.3: By 2030, combat desertification, restore degraded land and soil, including land affected by desertification, drought and floods, and strive to achieve a land degradation-neutral world.
- Indicator 15.3.1: Proportion of land that is degraded over total land area
SDG 17: Partnerships for the Goals
- Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology and financial resources.
- Indicator 17.16.1: Number of countries reporting progress in multi-stakeholder development effectiveness monitoring frameworks that support the achievement of the sustainable development goals
- Target 17.17: Encourage and promote effective public, public-private and civil society partnerships, building on the experience and resourcing strategies of partnerships.
- Indicator 17.17.1: Amount of United States dollars committed to public-private and civil society partnerships
Mexico has experienced a dramatic rise in climate-related disasters in recent decades, with particularly severe consequences for its agricultural sector. Government data reveals that over 80% of economic losses from weather-related disasters since 2000 have affected agriculture. In southern Mexico, 87% of maize farmers report significant climate impacts, with smallholder farmers on non-irrigated lands being especially vulnerable to crop losses from floods and droughts.
In response to these challenges, Mexico’s government launched an innovative parametric insurance program in 2022 through its Tripartite Agreement partnership. Developed jointly with the Secretariat of Treasury and Public Credit (SHCP) and the Secretariat of Agriculture and Rural Development (SADER), the program initially protected over 10,000 smallholder farmers against climate shocks. Additionally, during the pilot, the company Raincoat provided the IT insurance platform for beneficiary data management.
First, the parametric excess rain-fall and drought are tracked via satellite so rates and triggers are agreed in advance, with fast and direct pay-out without loss adjustment. The total sum insured per hectare is approximately 100 USD (maximum payout of ~500 USD per farmer) and the state insurance company Aseguradora Agropecuaria Mexicana (AGROSEAMEX) is then responsible for managing claims and payments to farmers.
While in its pilot phase, the insurance triggered payouts to more than 1,400 producers following extreme weather events, providing critical support for livelihood recovery and community resilience. The project was then broadened and now insures a total of 10,000 beneficiaries, with plans to reach 200,000 in the future granted it gets national support.
Building on this success, the SHCP has incorporated the pilot results into formal proposals for federal budget allocations to expand the program in 2024. The Insurance and Risk Finance Facility (IRFF) plays a key role in this process, advising the Mexican government on integrating risk transfer mechanisms into national climate adaptation and development strategies. The IRFF’s technical assistance extends to gender-sensitive programming, including specialized financial literacy training and policy development support to promote women’s participation in risk management systems.
This program exemplifies the Tripartite model’s three-pronged approach: strengthening insurance market foundations, co-designing risk finance solutions with private sector partners, and building government capacity for scaling climate resilience measures. Beyond the parametric insurance product, UNDP supports Mexico in developing regulatory frameworks, building technical expertise, and aligning risk finance strategies with biodiversity conservation goals – creating a comprehensive approach to climate adaptation in the agricultural sector.
This initiative forms part of the broader Tripartite Agreement between UNDP, Germany’s Federal Ministry for Economic Cooperation and Development (BMZ), and twenty global insurers under the Insurance Development Forum. Operating across twenty countries, the partnership has mobilized $5 billion in risk coverage for 64 million vulnerable people worldwide.
● Community engagement is critical: The high enrollment rate (94.1%) was achieved through in-person outreach, including home visits and local events, with special attention to gender inclusion (42% women enrollers) and indigenous language accessibility.
● Digital tools enhance efficiency: The mobile application enabled seamless enrollment even in low-connectivity areas, proving essential for reaching remote smallholder farmers.
● Gender-sensitive design improves adoption: 100% of women beneficiaries expressed willingness to renew coverage, highlighting the value of tailored financial products for marginalized groups.
● Sovereign partnerships enable scale: Collaboration between government (SHCP, SADER), insurers, and UNDP allowed rapid pilot testing and laid the groundwork for future national expansion to 200,000 farmers.
● Parametric triggers ensure timely support: Automatic payouts during extreme weather events demonstrated the model’s effectiveness in delivering rapid relief to 1,400+ farmers.
Farmer registry; Digital transformation of social protection information systems
United Nations Development Program (UNDP)
Secretaría de Hacienda y Crédito Público
Secretaría de Agricultura y Desarrollo Rural
Aseguradora Agropecuaria Mexicana (AGROSEAMEX)
German Federal Ministry for Economic Cooperation and Development (BMZ)
Multi-level governance: The Insurance Development Forum (IDF), the Ministry of Treasury and Public Credit, the German Government and the United Nations Development Programme (UNDP) developed this parametric insurance program for small producers that are vulnerable to climate events as partners. The insurtech company Raincoat provided the IT insurance platform during the project roll-out phase. In parallel to this, UNDP offered technical and coordination assistance to both help deliver on the industry-led risk financing solution and combine that with long-term investments to integrate risk-financing and insurance into national development strategy and delivery.
This is the first country project to be launched in 2022 under the Tripartite Agreement announced in 2019 between the German Federal Ministry for Economic Cooperation and Development (BMZ), the IDF and UNDP, to deliver technical assistance and risk financing solutions to twenty countries vulnerable to climate change by 2025. The InsuResilience Solutions Fund (ISF), funded by the KfW Development Bank on behalf of BMZ, is co-funding the implementation of the programme alongside the IDF insurance industry members.
The parametric insurance program in Mexico currently covers over 10,000 smallholder farmers against floods and droughts through its sovereign risk transfer solution, with plans of expansion to 200,000 beneficiaries. During the pilot phase, the coverage was triggered twice, enabling direct payments to more than 1,400 affected producers to strengthen climate resilience. The United Nations Development Program projects that a total 3.7 million poor and vulnerable people will be reached indirectly by this project by its completion, protecting them against harvest shortfall losses due to drought or uneven rainfall.
The United Nations Development Program projects a total cost of € 4.4 million ($4.7 million USD) over the timeline of March 2022 to March 2025. The enrollment cost of the project was approximately $600 MXN ($32 USD) per producer.
Claim manager and payment deliverer – AGROASEMEX (Aseguradora Agropecuaria Mexicana) official website linked to Ministry of Agriculture’s farmer registry (RAN): https://www.agroasemex.gob.mx
Plataforma Nacional de Transparencia – Mexico’s national government transparency portal: https://www.plataformadetransparencia.org.mx/Inicio
Plataforma Nacional de Datos Abiertos – https://www.datos.gob.mx/
Tripartite Agreement: https://undp-irff-uat.assyst-uc.com/projects/tripartite-agreement