Crop Insurance for Climate Resilience: Priorities for South Africa’s G20 Presidency

This policy brief outlines priorities for South Africa's G20 presidency to mainstream crop insurance as a tool for climate resilience in Africa. It evaluates the evolution of insurance models—from multi-peril to index-based and digital solutions—and recommends that the G20 promote high-quality, inclusive products, holistic risk management, and evidence-based subsidy frameworks to support smallholder farmers.

• Crop insurance is a critical tool for climate resilience in Africa, where nearly double the global proportion of people are at risk from severe weather events. It provides a safety net against floods, droughts, pests, and diseases, which can encourage risk-averse farmers to invest in productivity-enhancing technologies and improve their access to credit.
• The evolution of crop insurance in Africa has moved from multi-peril crop insurance (MPCI), which often created moral hazard and lacked incentives for loss prevention, to index-based insurance (IBI). While IBI reduced costs by using objective measures like satellite imagery or weather stations, it faced low demand due to basis risk—the gap between payouts and actual losses—and liquidity constraints.
• Recent innovations aim to reduce basis risk and increase inclusivity. These include 'gap insurance' (combining index insurance with audits), 'insurance coupons' for narrow risk regions, picture-based insurance (PBI) using smartphones for remote damage assessment, and products specifically designed to address the risks faced by women.
• Insurance is most effective when integrated into a broader risk management strategy rather than acting as a standalone solution. It should complement public social protection, remittances, and savings. For example, sovereign insurance through the African Risk Capacity (ARC) can fund the scaling up of safety nets after weather shocks.
• Public subsidies for insurance should be tailored based on the type of farmer. For smallholders near the poverty line, subsidies should link to safety nets and public relief. For commercial farmers, public funds should target market development, such as improving weather station networks, digital infrastructure, or reducing reinsurance costs.
• South Africa's G20 presidency is encouraged to leverage AI and digital tools to improve insurance quality and inclusion. Recommendations include establishing a body to monitor product quality and basis risk, and partnering with organizations like the Green Climate Fund (GCF) and the World Bank’s Global Index Insurance Facility (GIIF) to fund technological integration.
• To foster holistic risk management, the document suggests documenting the success of bundling insurance with credit and inputs, learning from programs like DRIVE in the Horn of Africa, and creating regulatory frameworks that allow migrants to insure remittances sent to their origin regions.

APA

Kramer, B., & Hill, R. (2025). Crop Insurance for Climate Resilience: Priorities for South Africa’s G20 Presidency. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2025/09/SAIIA_PN_16_KramerHill_G20CropInsurance1.pdf

Chicago

Kramer, Berber, and Ruth Hill. Crop Insurance for Climate Resilience: Priorities for South Africa’s G20 Presidency. South African Institute of International Affairs, 2025. https://saiia.org.za/wp-content/uploads/2025/09/SAIIA_PN_16_KramerHill_G20CropInsurance1.pdf.

Wikipedia

{{cite report |last1=Kramer |first1=Berber |last2=Hill |first2=Ruth |title=Crop Insurance for Climate Resilience: Priorities for South Africa’s G20 Presidency |publisher=South African Institute of International Affairs |date=16 September 2025 |url=https://saiia.org.za/wp-content/uploads/2025/09/SAIIA_PN_16_KramerHill_G20CropInsurance1.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kramer2025crop, author = {Kramer, Berber and Hill, Ruth}, title = {{Crop Insurance for Climate Resilience: Priorities for South Africa’s G20 Presidency}}, institution = {South African Institute of International Affairs}, year = {2025}, month = sep, url = {https://saiia.org.za/wp-content/uploads/2025/09/SAIIA_PN_16_KramerHill_G20CropInsurance1.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }