What does it take to build an insurance product that truly responds to the realities of seaweed farmers? The answer lies in bringing everyone to the table.

Seaweed farming drives Zanzibar’s Blue Economy, providing livelihoods and income for thousands of households, particularly women and youth. However, climate threats like rising sea temperatures, marine heatwaves, strong winds, changing ocean conditions, excessive rainfall and disease outbreaks are increasingly affecting production, and threatening these communities’ livelihoods.  To protect these farmers, the United Nations Development Programme (UNDP), in partnership with the Zanzibar Disaster Management Commission (DMC) and the Ministry of Blue Economy and Fisheries, is supporting the development of a climate-risk insurance solution tailored to seaweed farmers in Unguja and Pemba. The proposed solution aims to provide farmers with financial protection against defined climate-related production losses while strengthening resilience, expanding financial inclusion and supporting the sustainability of the seaweed value chain.

The initiative is being advanced through collaboration between two UN Zanzibar Joint Programmes: Integrated Innovations for Sustainable Development: Empowering Vulnerable Communities in North Unguja and North Pemba and Transforming Seaweed Farming Through Integrated Financial Solutions. This collaboration connects climate and disaster-risk management with the development of inclusive financial solutions for Zanzibar’s seaweed sector.

Bringing everyone to the table

Developing an insurance solution that responds to the realities of seaweed farmers requires more than technical insurance expertise - it needs direct input from farmers and local institutions. To build this, organisers facilitated a series of bilateral technical engagements followed by a multi-stakeholder Co-Creation Workshop.
These sessions  brought together seaweed farmers and producer groups, alongside representatives from the Ministry of Finance; Ministry of Blue Economy and Fisheries; Zanzibar Disaster Management Commission; Zanzibar Insurance Corporation; Zanzibar Seaweed Company; Tanzania Meteorological Authority; Office of the Chief Government Statistician; Zanzibar Economic Empowerment Agency; People’s Bank of Zanzibar; Zanzibar Social Security Fund; Zanzibar Social Health Insurance Fund; Maisha Bora Foundation; and other actors supporting the seaweed value chain.

Key discussion points included: 
•    Fidning reliable climate data to accurately measure risks
•    Setting fair pricing, affordability and transparent payout mechanisms
•    Designing accessible farmer registration and integrating the product with existing government and financial services.
These engagements provided an important opportunity for institutions to share their experiences, identify challenges specific to Zanzibar’s seaweed sector and propose practical recommendations. Participants highlighted the importance of reliable and sufficiently detailed climate data, accessible farmer-registration systems, continuous farmer awareness and financial-literacy activities, stronger institutional coordination and an affordable delivery model.

From consultation to co-creation

The co-creation process resulted in a Workshop to collectively review, validate and refine the emerging product concept. The diversity of participants allowed the proposed solution to be examined from several perspectives—from the daily experiences of farmers to the technical requirements of insurers, the data responsibilities of climate institutions, the delivery capabilities of financial institutions and the policy priorities of government.
During the workshop, stakeholders assessed the principal climate risks affecting seaweed production, reviewed different insurance-product options, discussed possible triggers and payout arrangements, examined indicative coverage levels and considered how the product could be distributed to farmers across Unguja and Pemba.

A proposed product shaped through co-creation

The co--creation Workshop resulted in a proposed hybrid parametric insurance model. Instead of relying on slow, farm to farm physical damage assessments, parametric insurance pays out atomatically when independent environmental data hits specific threshold. 
The proposed coverage tackles three main climate risks, capped at 100 per cent of the total sum insured:
•    Sea Surface Temperature (up to 50% payout): Triggered when . temperatures hit thresholds beginning at approximately 32°C
•    Excessive (up to 30% payout): Triggered by cumulativerainfall, such as  200 millimetres over a seven-day period. 
•    Strongwinds (up to 20% payput):  linked to wind speeds that typically break  ropesor damaged farming structures. 

Proposed Financials and Distributions: 
•    Target coverage: up to TZS 25,000 per insured month, equivalent to TZS 300,000 over 12 months of continuous cover for smallholders. 
•     Flexibility: The policy uses a one-month cover that can be renewed monthly to align with individual harvest cycles. 
•    Distribution:. Potential  pathways include seaweed producer groups and cooperatives, credit-linked insurance through financial institutions such as the People’s Bank of Zanzibar, government-supported input and economic-empowerment programmes, and processors or off-takers. All product features, trigger levels, benefits and distribution arrangements remain preliminary and are subject to further data analysis, farmer validation, insurer review and regulatory approval.

How the proposed solution could work

Unlike traditional insurance, which generally requires an assessment of the physical losses experienced by each farmer, parametric insurance uses independently verified climate or environmental data. A payout may be generated when an agreed indicator reaches or exceeds a predefined threshold, provided that the farmer’s policy is active and the insured farm has been registered and georeferenced. This approach could support faster, more transparent and cost-effective payouts following climate shocks. However, its effectiveness depends on the accuracy of the selected indicators and their relationship with farmers’ actual losses. Reliable historical climate data, production information, farm locations and a clear understanding of how specific climate conditions affect seaweed production are therefore essential. Approved meteorological observations and satellite-derived data could be used to monitor the proposed triggers, linked where possible to the GPS coordinates of registered farms.

The Tanzania Meteorological Authority and other approved data providers would consequently play an important role in supporting product design, trigger monitoring and verification. The final trigger levels and payout structure would need to be established through further historical-data analysis, technical assessment and actuarial modelling.

Strengthening accessibility and farmer understanding

The co-creation process reinforced the importance of ensuring that the proposed insurance solution is practical, understandable and affordable for smallholder farmers. Farmers must clearly understand the risks covered, how the triggers are measured, the circumstances under which a payout would be made and the limitations of parametric insurance. Continuous awareness and financial-literacy activities will therefore be necessary before and during any future pilot. The policy is currently envisaged as a one-month cover that could be renewed monthly for up to 12 consecutive months, subject to payment of the applicable premium. This proposed structure is intended to align insurance protection with farmers’ production cycles and provide flexibility in premium payments. The consultations also considered possible premium-support arrangements to make the proposed product affordable during its initial implementation. Any subsidy or premium-support mechanism would require clear targeting, transparent governance and a pathway towards longer-term sustainability.

Defining institutional responsibilities

The bilateral engagements and Co-Creation Workshop also helped clarify the prospective roles of the institutions required to make the proposed insurance solution operational. Government institutions would provide policy leadership, programme coordination and alignment with wider Blue Economy, disaster-risk management and social-development priorities. Climate and statistical institutions would support access to the data required for product design, trigger monitoring and evaluation. Subject to its review and agreement, the Zanzibar Insurance Corporation could lead insurance underwriting and administration. Financial institutions, government programmes, seaweed companies, producer organisations and off takers could support farmer mobilisation, registration, premium collection and product distribution. Farmer groups and extension-service providers would also be essential for awareness creation, product education, feedback and implementation monitoring at the community level. Clarifying these responsibilities early in the design process is important for building a solution that is not only technically viable but also operationally practical and institutionally sustainable.

Moving carefully towards pilot implementation

Following the bilateral engagements and Co-Creation Workshop, a set of working product documents has been prepared. These include a proposed product structure, draft policy wording, a draft certificate of insurance, an indicative pricing model and proposed claims-management procedures. These documents remain drafts for consultation. They do not constitute an approved insurance policy or an offer of insurance to farmers. The next step will be to submit the working product package to the Zanzibar Insurance Corporation for  review and consideration. Based on the insurer’s feedback, the product will undergo further technical refinement, data validation, actuarial assessment and stakeholder consultation before being submitted to the insurance regulator for consideration.
A dedicated distribution-model co-creation process will also be undertaken to assess the accessibility, affordability, operational feasibility, potential reach and long-term sustainability of the proposed delivery pathways. Only after the required insurer and regulatory reviews have been completed will the final product terms—including the risks covered, trigger thresholds, sum insured, premium, payout structure, exclusions and delivery arrangements—be confirmed and communicated to farmers. The bilateral engagements and Co-Creation Workshop represent an important milestone in Zanzibar’s journey towards developing its first insurance solution specifically designed for seaweed farmers. More importantly, the process demonstrates that effective climate-risk financing must be developed with farmers and the institutions that support them—not designed for them in isolation.

As climate change places increasing pressure on coastal livelihoods, Zanzibar has an opportunity to pioneer an innovative insurance solution that could protect seaweed farmers against climate-related losses. Beyond providing financial support following climate shocks, the proposed solution could safeguard household incomes, strengthen financial inclusion, support investment across the seaweed value chain and contribute to a more resilient and sustainable Blue Economy for future generations.