Across the globe, smallholder farmers lose between $50 billion and $100 billion annually, often from natural disasters, but reportedly only 1% is insured from these accidents. As an example, in Feburary 2019, the company made several payouts to farmers in Kenya as poor rainfall caused large amount of crop failure.

Jason Schapiro, WorldCover Lead Engineer, said “Our algorithms are specifically calibrated to rainfall events by region and crop type, automatically triggering instant payouts to insured farmers through mobile money services like M-Pesa.”

Emerging markets and climate insurance focused  insurtech start-up WorldCover has partnered with the world’s largest ILS fund manager Nephila Capital, who will now provide some of the firms reinsurance protection through its Lloyd’s syndicate 2357.

With Nephila Capital onside for reinsurance capital as well, WorldCover is well-positioned for growth, working with a team that has an understanding of the challenges associated with parametric data-driven insurance products, as well as emerging market climate risk exposure.

Over the last decade, there has been a global increase in the focus on climate change and the risks and dangers associated with it. And for good reason. Damage from climate-related disasters was in the billions of dollars in 2019 alone. California wildfires caused $25 billion in property damage, while Typhoon Hagibis in Japan cost an estimated $15 billion. Other extreme weather events, including rampant brush fires in Australia, widespread droughts in East Africa and severe flooding in South Asia, have had devastating consequences.

Like Kin, NYC-based WorldCover was created in response to climate-related disasters. It works to provide drought insurance to farmers in Africa. When first launched, WorldCover was available only in Ghana and covered only one crop: maize. Since then, the company has expanded to multiple markets in East and West Africa, covering four categories of crops: cereals, legumes, root vegetables and perennials. WorldCover uses a combination of satellite imagery and on-the-ground sensors to understand local weather patterns in order to create insurance options for farmers facing some of the world’s worst droughts. The company uses its satellites to monitor rainfall patterns and trigger payouts immediately.

The product of WorldCover is certainly customer centric at its core. When initially launching, Chris went to Ghana and began speaking to the farmers there. To him, it was important they didn’t “sit around and design a product by committee,” but instead that they actually went and understood what the customer problems were.“I would ask a farmer, what’s your biggest problem today? What are you worried about today? Just a very general question, and they would say I’m worried that the rain won’t come. I’m worried that my crop will fail and there will be drought this year.” — Chris Sheehan, CEO WorldCover

Robert is a father of four and lives in the rural areas at the outskirts of Tamale, in northern Ghana. He lives off his one hectare of land where he grows maize and groundnuts. He sells part of it to the local market and eats the rest with his family. Like many of the 475 million smallholder farmers around the world, he faces constant threats of droughts or other weather hazards that can destroy his family’s main source of subsistence: Crops. Ninety percent of farmers in Africa have no access to crop insurance or other safety net.

WorldCover addresses this problem by providing farmers with simple and affordable microinsurance policies, insuring their crops against the risk of drought. Microinsurance and farmers receive rapid payout in cases of drought during the crop growth period. WorldCover ran a full pilot project in 2015 among Rice and Sorghum farmers and signed up a significant number of farmers, with many more committed.

Despite robust financial subsidies, many programs have found that selling insurance to poor African farmers is extremely challenging. This remains the case even when risk products are bundled with other services, such as community savings programs and training in how to improve crop yields. For instance, a 10-year-old government farm insurance program in Ghana has fallen far short of expectations, according to multiple observers—including the same Christopher Udry who inspired Sheehan to create WorldCover. Udry and colleagues reported in a March 2019 paper that the government insurance program had had little meaningful impact. In Kenya and Ethiopia, risk transfer programs aimed at pastoralists have had disappointing results, according to an extensively researched June 2019 article in Devex, which was underwritten by the Technical Centre for Agricultural and Rural Cooperation. Experts point to two main types of obstacles. First, there are enormous marketing and logistical challenges inherent in trying to sell small insurance policies to very poor farmers who’ve never heard of the concept, live in remote areas and may only speak indigenous languages. Second, it’s difficult to build customer loyalty for an abstract product that often doesn’t provide what farmers expect. The Devex story describes how some pastoralists thought they were putting money into a savings account. When they didn’t get their premiums back, “they start[ed] thinking that this product has failed them,” a coordinator said.

The policies or “smart contracts” currently under development are based on blockchain, the distributed ledger technology that underpins cryptocurrencies like bitcoin. This avoids the need for paperwork and means payouts can be triggered automatically when certain conditions are met, such as a specific number of days of drought. The system uses high-resolution satellite images to detect rainfall and plant growth data.Conventional crop insurance is too expensive for more than 500m small farmers worldwide, says Christopher Sheehan, founder and chief executive of US-based WorldCover, which developed the system. “But with machine learning and blockchain technology, we can process these data very cheaply to produce a really simple crop insurance product with premiums of $20 to $50 for a farmer who might only be earning $3,000 a year.” Payments can be made using mobile money transfer services such as M-Pesa.

Bisharo’s story is one of the many urban merchants who have discovered the power of digital payments for their businesses. Over the past few years, technology providers such as BelCash with their HelloCash mobile money, product working closely with the Somali Microfinance Institution, have made significant progress in helping merchants like Bisharo realize the benefits of digitizing payments.

If you would have told me 10 years ago that I would be running a company that does agriculture insurance, I would not have believed you. Agriculture has not been an area that people have invested in across Africa. Many of my cousins and childhood friends still work on their farms, but they are reluctant to invest, putting in only what they can afford to lose.The reason they don’t invest is simple. The chance of them losing their money due to the vagaries of the weather is huge. Working in insurance got me to understand about probabilities of loss early on — probabilities that cause our continent to be food insecure.

MTN Mobile Money (MoMo) subscribers in Cameroon can now receive international money transfers through MoneyGram directly into their mobile wallets. This is thanks to a recent partnership between MoneyGram and MFS Africa, which extends the inbound international money transfer service to MTN MoMo payment accounts on new channels.

Judging by the recent set of results from Purple Group, their easy-to-use and cost effective EasyEquities trading platform is well on its way to becoming one of the leading platforms of the investing world. This relationship enables Satrix, the largest equity index tracking provider in South Africa, to employ the same innovative technology driving the EasyEquities platform to offer ETF’s to the nation.

WorldCover investor and EchoVC founder Eghosa Omoigui believes the startup’s insurance offerings can actually help farmers improve yield. “Weather-risk drives a lot of decisions with these farmers on what to plant, when to plant, and how much to plant,” he said. “With the crop insurance option, the farmer says, ‘Instead of one hector, I can now plant two or three, because I’m covered.’ ”