Protecting Cameroon’s Farmers from Climate Risk: 3 questions for Antoine Denoix, CEO AXA Climate

We have met Antoine Denoix, CEO of AXA Climate, to understand the scope of the partnership, know what role parametric insurance can play in society, and how it can protect the world’s most vulnerable populations against climate risks.

How does parametric insurance help farmers in Cameroon manage climate risks?

Parametric insurance pays out based on objective and transparent indices such as cumulative rainfall, temperature, wind speed and others. Payouts are triggered as soon as the index reaches a pre-agreed threshold. This means that no costly farm visits to assess the losses are required and payouts can quickly reach impacted farmers. For the pilot programme in Cameroon, payouts are based on satellite data measuring evapotranspiration, the loss of water from soil and plants through evaporation and transpiration, which is an indicator for crop growth. Drought affects the ability of plants to capture CO2 and release H2O. As such, measuring evapotranspiration levels in insured areas makes it possible to estimate drought-related crop yield loss. If in a given area the seasonal evapotranspiration falls below a certain threshold, insured farmers in this area are automatically and rapidly compensated, without the need to submit a claim to their insurance companies.

Quick payouts help to secure vulnerable farmers’ businesses and livelihoods. With parametric insurance, intervention in just a few weeks after warning signs of a drought means farmers can replant, use the payouts for other reasons and avoid falling into the poverty trap.

What role does farming play in Cameroonian society and what specific climate risks do farmers face?

Cameroon is already facing an abnormal recurrence of climate risks such as violent winds, extremely high temperatures and excess rainfall, which endanger communities’ ecosystems and the services they provide. Cameroonian people must therefore overcome a significant challenge, as their economic and social well-being depend largely on the viability of its main development sectors.

The pilot project based on parametric insurance coverage contributes to improving the productivity of the agricultural sector, which remains vulnerable to climate hazards such as droughts and excess rainfall. This is particularly the case for the Cameroonian economy, as agriculture contributes to 20% of the country’s gross domestic product and employs 54% of its working population. Creating parametric insurance programs hence allows to create disaster risk financing mechanisms for small-holder farmers, where no other risk transfer tool is available in order to close the protection gap. 

What other initiatives and partnerships does AXA lead in the region?

AXA has a Memorandum of Understanding with the World Bank’s Global Index Insurance Facility to build out parametric insurance in developing countries. AXA Climate has a strong focus on Public-Private Partnerships in Africa, having set up a similar parametric drought program in Senegal with the national agriculture insurer and developing parametric insurance in Côte d’Ivoire. AXA Climate is also the lead reinsurer of the sovereign risk pool, the African Risk Capacity and reinsures the World Food Programme’s R4 Resilience initiative and the national agriculture programs in Rwanda and Zambia.