Unlike traditional insurance, parametric products pay out quickly when agreed triggers—like wind speed, rainfall, or wave height — are met. No long claims processes, no need to prove individual loss. That speed matters. For families who live day to day, fast cash flow can mean the difference between surviving the storms of changing climate conditions and being pushed deeper into poverty.
Rare, in partnership with Willis, a WTW business, and the Ocean Risk and Resilience Action Alliance (ORRAA) with funding from the Government of Canada and the UK Government’s Blue Planet Fund, has been testing how this model can work for fishers. In the Philippines, we’ve partnered with government and global insurers to design the first-ever parametric insurance product to protect small-scale fishers’ income. It provides fast, transparent payouts for income loss after bad weather so households can recover without being forced into unsustainable choices.
When “Bad Weather” Creates Compounding Shocks
When high winds or heavy rain keep boats ashore, a fisher’s income vanishes overnight. Over a fisher’s lifetime, statistically the greatest loss of income doesn’t come from sudden, catastrophic events like hurricanes or typhoons, but from the steadily increasing number of “bad weather” days that keep subsistence fishers ashore. Climate change is making these days more frequent.
When the weather clears, fishers try to catch as many fish as possible to recoup their losses. Sadly, without cold storage, up to 60% of the catch spoils, compounding financial losses while harming ecosystems. Without financial protections, families remain vulnerable, ecosystems degrade, and the cycle deepens.
A New Safety Net: Parametric Insurance for Fishers
Parametric insurance has long been used post-disaster to help recover assets such as buildings and roads. Yet while assets can be rebuilt, the loss of income leaves lasting scars on families and communities. This new product is the first of its kind designed specifically to protect fishing livelihoods, giving people the means to provide for their families while also reducing pressure on vulnerable ecosystems. Unlike traditional indemnity insurance, which requires lengthy claims processes, parametric insurance pays out automatically when pre-agreed conditions are met: wind speed, rainfall, wave height. No paperwork. No delays.
Here is how it works: if unsafe conditions prevent fishing for an aggregate number of days in a 5 day period, the policy triggers a payout. The decision is based purely on verified weather data, ensuring transparency and speed. Payouts are automatic, fast, and delivered directly to fishers, giving them the confidence to stay off the water during dangerous conditions even in remote communities.
From Assets to Livelihoods: Why Parametric Insurance Matters
The stakes are high and so is demand. In the Philippines, a 2019 Rare survey found that fewer than 19% of fishers in our partner communities had any form of insurance. When asked about their greatest source of income loss, most pointed to weather-related shocks. Financial impacts from extreme weather fall hardest on those least able to bear them – families and ecosystems reliant on fragile livelihoods.
For fishers living day-to-day, speed and transparency aren’t luxuries—they’re lifelines. A payout that arrives months later isn’t a safety net – it’s a failed promise. Parametric payouts bridge that gap: when fishers know they’ll receive support quickly, they’re more likely to stay ashore in unsafe conditions, observe seasonal closures, and give fish stocks time to recover. What looks like simple financial protection is actually a conservation multiplier.
We’re not replacing property insurance but adding a much-needed tool. By shifting from indemnity-based models to parametric triggers, we:
- Deliver payouts in near-real time based on pre-established climate indicators, bypassing lengthy claims assessments and ensuring rapid relief for those who rely on timely cash flow.
- Expand coverage to informal economies—like small-scale fishers—where traditional insurance rarely reaches, by basing payouts on observable events rather than asset documentation.
From Pilot to Portfolio: Redefining Resilience Finance
By engaging Bureau of Fisheries and Aquatic Resources (BFAR) and state insurer Philippine Crop Insurance Corporation (PCIC) from the outset, the product was built inside government systems rather than around them — a foundation for long-term scale. BFAR is the policyholder, and PCIC is the primary insurer.
The insurance first launched across 24 coastal municipalities, covering 14,200 registered fishers. BFAR’s national budget funded the pilot and envisions scaling the coverage, eventually protecting all registered fishers nationwide.
The Government of the Philippines is piloting the program as a benefit for registered fishers. By tying coverage to fisher registration, the program incentivizes fishers to register, which strengthens national data, improves governance, and ensures those who comply with conservation rules are the ones to benefit. It shows how climate finance can be woven into institutions, where solutions endure and scale.
Co-designed with Willis to meet commercial insurance standards, this coverage has already attracted the reinsurance market – a critical milestone because it transfers risk efficiently, enables institutional capital to engage, and allows insurers to scale with confidence. This is more than a pilot – it’s a vetted model with market demand, making it replicable across geographies. As parametric solutions gain traction, insurers and reinsurers globally can adopt them, opening private capital pathways into areas previously seen as too risky and extending the reach of conservation finance far beyond its initial scope.
Looking Ahead
The Philippines has set a powerful example by embedding livelihood protection directly into the national budget. Other governments can follow suit, building this kind of resilience into their own social protection and climate strategies.
To scale and sustain this progress, premium financing solutions are essential. Expanding risk pools, leveraging blended approaches, and engaging private capital can help lower costs and make coverage accessible at scale.
Just as important, we need to broaden the suite of parametric products beyond fisheries to cover more livelihoods – from fishers, to farmers, to informal workers – ensuring communities have the security to adapt and thrive. Parametric insurance is more than a payout mechanism. Done right, it protects people and natural assets together, enabling communities to build resilience with dignity and stability.