The national science organisation will design a new yield-based insurance index for wheat farmers.

CSIRO says the tool will allow insurers and farmers to develop risk-sharing strategies for drought conditions and provide outlines for parametric insurance options. More details on the project are expected to be announced next year.

The project is part of the organisation’s Drought Resilience Mission, which has included research on drought-resistant wheat variants, a digital climate prediction product for farmers, and developing drought resilience plans for communities.

CSIRO says it aims to produce research that will “support [the] development of parametric insurance products for farmers, which is efficient and can be a lower-cost form of insurance”. 

“The concepts are tested with farmers to see if they are potentially attractive methods of mitigating some of the climate-based risks they face,” a spokesperson told insuranceNEWS.com.au. “They are then tested with insurers to assess their potential commercial viability.”  

CSIRO acknowledges that insurers ultimately determine pricing, but says its research could contribute to reduced costs and “may allow new types of risks to be insured”.