PT Mandiri AXA General Insurance (AXA Mandiri) provided 1,000 free insurance certificates to protect smallholder farmers in Karangploso, Malang, East Java, from excessive rainfall that may impact their crop harvest.
Second pilot project
AXA Mandiri’s Parametric Crop Insurance will cover a planting period of 1 March until 31 May 2016. This is the insurer’s second pilot project for AXA Mandiri to distribute free Parametric Crop Insurance. AXA Mandiri had previously provided free Parametric Crop Insurance to protect crops during the December 2015 to February 2016 planting season. In these two stages, AXA Mandiri has distributed almost 1,100 Parametric Crop Insurance to smallholder farmers who are categorised as the recipients of government’s subsidised fertilizer.
This insurance is designed specifically so that AXA Mandiri will provide compensation to farmers if the Meteorology, Climatology and Geophysics Agency (BMKG)’s data in Karangploso shows that the rainfall in the region during three months planting season is above 700 mm – a condition that may decrease crop productivity, especially rice. AXA Mandiri will provide compensation benefits in the form of fertiliser, seeds or agricultural equipment valued up to US$1.5 million per certificate.
Corporate responsibility programme
AXA Mandiri President Director Albertus Wiroyo handed over the certificates to Karangploso small scale farmer representatives in a ceremony attended by Head of Non-Bank Financial Industry Supervision Department 1A of the Financial Services Authority (OJK) Yusman, representatives from Bank Mandiri and local government representatives.
The handover is part of the company’s corporate responsibility programme and is in line with Indonesian government’s programme on agriculture insurance which described in the Law No. 99/2013 regarding Farmers’ Protection and Empowerment.
The programme is also aligned with Bank Mandiri’s commitment to serve customers from micro-economic sectors by opening distribution channels for AXA Mandiri to distribute the agriculture insurance through fertiliser retailers, as well as collaboration with distributors such as PT Gresik Cipta Sejahtera.
Bank Mandiri is ready to assist in the crop insurance value chain through its branchless banking system when customers make a purchase of the insurance or submit a claim.
Harvest failure increasing
In 2015, the Indonesian Ministry of Agriculture recorded harvest failure in 102,072 hectares of land, while in 2014, the harvest failure reached an area of 179,892 hectares. The ministry noted weather problems such as floods and droughts contributed 95% of the cause for harvest failure.