Building resilience, putting food on the table

How are insurance innovations protecting Nepal’s smallholder farmers from shocks and stresses?

February 22, 2026

Author

Monica Upadhyay

Head of Communication, UNDP Nepal

Access to climate risk protection is fundamental to safeguarding livelihoods, strengthening food security and advancing inclusive economic growth. In Nepal—where agriculture employs nearly 60 percent of the workforce and contributes over a quarter of GDP—climate shocks are no longer occasional disruptions; they are a defining development challenge.

Aerial view of dense low shrubland with green-yellow bushes. — Photo: UNDP Nepal

Through locally tailored insurance solutions aligned with Nepal’s Integrated National Financing Framework Financing Strategy (INFF Financing Strategy), UNDP is helping turn national financing commitments into tangible protection on the ground. Using satellite data, mobile platforms and Artificial Intelligence (AI) in a public private partnership model, agricultural insurance is being made easier for farmers to access. By speeding up claims and payouts, farmers can recover quickly from shocks and resume farming.

Two people stand among a field of yellow flowers with houses in the background. — Photo: UNDP Nepal

AI-Powered insurance for livestock farmers

For many livestock farmers, insurance has long been associated with delays, paperwork and uncertainty. Proving a death claim for a cow or buffalo can take months, with repeated inspections and complicated documentation. Cultural considerations add another layer, as conventional ear tags are considered unsuitable for cattle used in religious rituals.

Person kneels beside a dark donkey feeding on hay; a white bucket sits nearby. — Photo: UNDP Nepal

“Now, I just take a photo of my buffalo’s muzzle, and the compensation goes straight into my bank account. What used to take months now happens in days, helping my family recover and keep food on the table,” says Harka Bahadur Saud from the remote hills of Achham district in the SudurPaschim province.

Developed by United Ajod Insurance Company and PlantSat Nepal, the programme is being piloted with 390 farmers in the Humla, Accham and Lalitpur districts —demonstrating how technology can make livestock insurance faster, fairer and more accessible. To date, 328 cattle have been insured, benefitting 126 farmers and 526 family members.

Two black goats beside an open laptop outdoors on a sunny farm. — Photo: UNDP Nepal

Climate-smart crop insurance triggered by weather data

Smallholder farmers on rain-fed plots are among the hardest hit by climate shocks. Despite government subsidies, insurance coverage remains limited, leaving most farmland unprotected. Women farmers face additional barriers—including limited access to land, finance, and insurance services.

NLG Insurance Company, winner of UNDP Nepal’s Innovative Insurance Challenge, has introduced a multi-risk parametric insurance product that uses satellite and meteorological data to protect potato farmers throughout the growing season.

Photograph: rural field with a small group by a fence; distant trees; signpost with panels. — Photo: UNDP Nepal

Implemented in partnership with First Choice Food—which mobilizes farmers through its potato network—and Weather Risk Management Solution (WRMS) India, the solution combines real-time weather monitoring, crop advisory services and reinsurance support.

Automatic weather stations near farms track local conditions, while farmers receive SMS alerts on climate risks and training through community meetings. Delivered through trusted local networks, the program increases credibility and accelerates uptakes.

I joined because the Ama Samuha brought it to us. They’ve been helping women with savings, credit, and community support for years, so I knew this insurance would genuinely benefit farmers like us."

Rupa Mahato, smallholder farmer

When extreme weather thresholds are breached, claims are triggered automatically—no inspections or paperwork required. This year, during the cold wave, Rupa’s payout arrived on time. “It wasn’t a large sum, but it helped us recover and keep food on the table.”

NLG Insurance has underwritten NPR 13 million in agricultural risk, covering 132 farmers across seven cooperatives, with reinsurance from Nepal Insurance Company. First-year premiums were covered by First Choice Food, and discussions are ongoing to expand access through cooperatives and potential government subsidies.

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These two examples show how technology is transforming agricultural insurance. By combining biometrics and weather data with trusted community networks, and environmental stewardship, these innovations are helping farmers recover faster, secure their livelihoods, and build resilient, food-secure communities across Nepal.