Hollard-Agri, an innovative micro-insurance initiative by Hollard Mozambique, has made a significant impact on the lives of 16,000 small farmers affected by drought in the provinces of Manica, Sofala and Tete, respectively.

Launched about a year ago, this micro-insurance is providing essential coverage to small farmers based on the cost of the seed, promoting sustainability, resilience and guaranteeing their livelihoods.

For this product, which only covers the cost of the seeds, Hollard paid claims of around 10 million meticais, following a severe drought caused by the El Niño phenomenon.

Israel Muchena, Executive Director of Life and Agriculture Insurance at Hollard Mozambique, said that "the number of farmers covered, 16,000, is still low compared to the 4 million small farmers in Mozambique.

However, what we are doing so far could serve as a baseline study for the launch of a national program with all stakeholders in the development of the agricultural sector, who have not yet implemented measures to protect farmers and improve their resilience."

Hollard's micro insurance structure is designed to be accessible and affordable, with premiums that make it feasible for farmers to participate.

The most basic option of climate insurance offers financial protection in the event of severe or extreme drought in the germination to maturity stages of crops.

The payment process is simplified, triggered automatically by satellite data and weather index levels, guaranteeing timely financial support and without time-consuming claims reporting procedures.

Currently, around half of the farmers covered come from a specific partnership, which includes offering insurance with the sale of seeds from the company Phoenix Seeds Lda.

"At the beginning of the agricultural season, farmers buy insured seeds, a more affordable approach that has worked very well," Muchena emphasized.

The GermanWatch global report identified Mozambique as one of the most vulnerable countries in the world to severe climate risks.

Agriculture is the backbone of Mozambique's economy, with a large part of the population dependent on the land and climatic conditions for their livelihoods and income. Climate change has increased the frequency and severity of droughts, exposing farmers to significant financial risks.

It becomes more difficult when farmers don't have access to financial services, and traditional insurance models haven't met their needs due to high premiums and complex claims procedures.

Hollard-Agri, the seed microinsurance, is Hollard Mozambique's main parametric insurance product, and thus seeks to optimize opportunities for creating value and improving the living conditions of communities, while at the same time adding innovation to the Mozambican insurance market.