Case 4: Embedded insurance for affinity-group members

Problem

Heat stress events aggravated by climate change drive adverse economics in the agricultural sector.

Solution

Parametric insurance provides relief to farmers after exceptionally hot weather.

Data

Remote-sensed forecast and nowcast temperatures used by Skyline to compute localised heat stress indices at individual animal level.

Structure

The coverage, embedded with a package of precision agriculture services, begins to pay out when heat stress events at an insured location exceed the local threshold specified in the policy.

Partner

ITK (Principal client and insured, data provider)
Pacifica (insuring partner)
SCOR (reinsuring partner)

ITK, an agritech business, provides various management products to the farming sector. These include a temperature-focussed management platform which, for example, allows dairy farmers to anticipate and take mitigation actions before visible signs of heat stress. ITK wished to embed insurance into its suite of services to cover losses due to extreme temperatures. They chose Skyline Partners to design and structure the coverage, and provide ongoing computation services.