Parametric Insurance for Climate Resilience — Proposal and Concept Development
Climate Finance · UC Berkeley Big Ideas contest, 2023 · With Alejandro Carrillo
An award-recognized proposal for automatic, remote-sensing-triggered crop insurance for smallholder farmers in Mexico.
Context
Smallholder farmers facing climate risk plant conservatively, under-investing in their own productivity because a single drought or pest event can be financially devastating. Insurance changes that calculus, but conventional crop insurance is costly to administer and slow to pay. In Mexico, coverage reaches only a small fraction of farmers — roughly 15%, per the research compiled in our proposal — and claims processes are poorly understood by those who are covered.
My role
With Alejandro Carrillo, I co-developed the Climate Resilience Platform proposal for UC Berkeley’s Big Ideas contest: concept design, market research, and the financial-mechanism design for a parametric insurance product.
Methods and work performed
The proposal’s core mechanism replaces claims adjustment with parametric triggers: remote-sensing technologies measure defined conditions on the ground — rainfall, vegetation indices — and payouts execute automatically when thresholds are crossed. Our work covered the risk problem and market gap, the trigger and payout design, the delivery platform concept, and the case for piloting in Mexico. This was proposal and concept development: the platform was designed and argued, not built or deployed.
Outputs and contribution
The proposal received the Innovative Finance Award as one of the top three financial solutions in the 2023 Big Ideas cycle. This project is where my finance background and development training meet most directly: designing financial instruments around the actual risk exposure of low-income households.
Implications
Parametric design trades precision for speed and cost — the open question our proposal engages is whether that trade is the right one for households that cannot wait out a claims process.