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🇪🇨 Ecuador /Economy & Trade

Ecuador launches innovative parametric agricultural insurance to protect producers

From El Comercio · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Ecuador has launched a new parametric agricultural insurance model that bases payments on climate conditions rather than on-site inspections.
  • This parametric insurance, already used in several Latin American countries, aims to protect producers from extreme rain and drought.
  • The pilot project, focusing on rice and corn, was developed with UN Development Programme support and involved various agricultural and financial stakeholders.

Ecuador has introduced a novel parametric agricultural insurance system designed to shield producers from climate-related risks, such as extreme rainfall and drought. This innovative model, operational since early 2026, bases payouts on specific climatic indicators rather than traditional field inspections.

The parametric insurance is not new in the region or in the world.

— Jorge Luis MorilloExplaining the established nature of parametric insurance in other countries.

Jorge Luis Morillo, coordinator of Insurance and Risk Financing Initiatives at the UN Development Programme (UNDP), explained that parametric insurance is not new to the region, with countries like Colombia, Peru, Chile, Uruguay, Argentina, Mexico, and the Dominican Republic already employing it. Globally, it's utilized in 39 countries as part of the UNDP's broader insurance and risk financing efforts.

The Ecuadorian pilot project was established following reforms to the Monetary and Financial Code in September 2025, which enabled this type of insurance. A 2024 UNDP report, based on a 2023 diagnosis, highlighted a lack of innovation in Ecuador's agricultural insurance since its inception in 2008, with less than 2% of farmers accessing policies.

The parametric insurance was adopted in Ecuador as a pilot project against extreme rains and drought, after reforms to the Monetary and Financial Code were approved in September 2025.

— Jorge Luis MorilloDetailing the regulatory and temporal context for the insurance's adoption.

In response, the UNDP collaborated with Ecuador's Ministry of Agriculture and Livestock, the Financial Policy and Regulation Board, the Superintendence of Companies, Values and Insurance, Hispana de Seguros y Reaseguros, and the Ecuadorian Federation of Insurance Companies (Fedeseg) to design a pilot product. The National Institute of Meteorology and Hydrology also participated. The product targets short-cycle crops like rice and corn.

The diagnostic identified that the country's agricultural insurance has not registered innovation since its creation in 2008, and that less than 2% of farmers access a policy.

— Jorge Luis MorilloHighlighting the need for innovation based on a prior diagnostic report.

The parametric insurance products for extreme rain and drought were developed by insurers within the Insurance Development Forum (IDF), including AXA Climate and Guy Carpenter Mexico. Hispana de Seguros y Reaseguros implemented the project on the ground. The first cycle, focusing on rain, ran from January to May 2026, covering 2,511 farmers in Guayas, Los Ríos, and Manabí provinces. However, Morillo noted that the rainfall indicators did not reach the threshold required to trigger insurance payments during this initial phase.

During that first cycle, the rainfall indicators did not reach the level established to activate the payment of the parametric agricultural insurance, and for that reason, the project did not execute any payment.

— Jorge Luis MorilloExplaining the outcome of the first pilot cycle regarding rainfall triggers.
DistantNews Editorial

Originally published by El Comercio in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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