In line with the recent Finagro initiative to promote voluntary microinsurance, the Colombian Congress is studying measures to increase the use of agricultural microinsurance by small-scale farmers in Colombia. The issues addressed by the bill include:

• The definition of microinsurance as a tool to offset the underlying risks to representative crops associated with climate variables.
• For the purposes of agricultural microinsurance, a small farmer is one that, while working in farming, does not have equity of more than one hundred and forty five (145) legal minimum monthly salaries in effect (SMMLV, as it is known in Colombia), including his/her spouse (by marriage) or permanent partner (by common-law), approximately equivalent to USD 32,000 at this time.
• The object of the microinsurance must be to provide cover for the risks associated with agricultural activity, mainly climate risks that affect at least 75% of the crop in question.
• The insured value per crop may not exceed 20 SMMLV (Approx. USD 4,300)
• The crop may not exceed an area of 5 hectares
• The premium of the agricultural microinsurance may not exceed 1.5 minimum legal daily wages in force (SMDLV as it is known in Colombia).

This rule seeks to protect people living in rural areas, whose only source of income is the labour-intensive production of agricultural produce on small plots of land. This population is especially prone to financial losses stemming from weather events, making agricultural microinsurance an ideal way of improving their quality of life and preventing their livelihoods from being cut short.

Furthermore, it also represents an opportunity for microfinance entities, which act as channels for marketing insurance policies in the Colombian market, including agricultural microinsurance.