Land Bank Insurance Company Launches Area-Yield Index Insurance to Strengthen Farmers’ Climate Resilience

Land Bank Insurance Company (LBIC), a leader in short-term agricultural insurance, has expanded its innovative risk solutions for farmers with the launch of Area-Yield Index Insurance (AYII). The product is designed to protect crop farmers from significant yield losses caused by widespread climatic and environmental risks such as droughts, floods, and pest outbreaks.

This new offering builds on LBIC’s successful Pasture Drought Index Insurance (PDII), launched last year to safeguard livestock farmers against grazing losses during severe droughts. While PDII targets livestock farmers, AYII focuses on crop farmers growing maize and soya beans in selected provinces.

Tailored for Smallholder Farmers

Developed in partnership with CelsiusPro and the International Finance Corporation (IFC), AYII forms part of the Africa Inclusive Insurance Program, which works to expand climate insurance access for African farmers and MSMEs. The program is supported by Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) and the Dutch Ministry of Foreign Affairs.

AYII offers seasonal protection by compensating farmers when average yields in a district drop below the area’s historical norm. Unlike traditional insurance, AYII removes the need for individual farm inspections. Instead, payouts are calculated using official yield data from the Department of Agriculture, ensuring automatic settlements within 30 days of data release.

Initial Coverage Areas

• Maize: Free State, KwaZulu-Natal, Mpumalanga, North West
• Soya Beans: Free State, KwaZulu-Natal, Mpumalanga, North West, Limpopo

Key Benefits

• No On-Farm Assessments: Claims based on verified district yield data.
• Faster Payouts: Settlements within 30 days after data release.
• Affordable Access: Lower administrative costs make it easier for smallholder farmers to participate.
• Comprehensive Protection: Covers systemic risks such as drought, flooding, and pest outbreaks.

Building a Stronger Safety Net

AYII complements the already operational PDII, which covers farmers in the Eastern Cape, Limpopo, North West, KwaZulu-Natal, and Mpumalanga. Together, these index-based products form part of LBIC’s broader strategy to strengthen agricultural resilience and expand risk management tools for underserved farming communities.

The initiative is supported by a catalytic grant from the Natural Disaster Fund (NDF), managed by Global Parametrics and funded by the UK’s Foreign, Commonwealth and Development Office (FCDO) and Germany’s KfW Development Bank. NDF shares risk with Hannover Re to expand climate resilience solutions for vulnerable communities across the Global South.

For more details on AYII or PDII, visit www.landbank.co.za.