Evaluating only IndexPact’s profile at its peak — without knowing the outcome — the model ranked Regulation as the #1 likely cause. Documented cause: External shock.
Key Events Timeline
FOUNDING
Founded in Cuiabá by Carlos Drummond to offer NDVI-triggered parametric drought insurance to Cerrado smallholders.
FUNDING
Raised R$28M from Barn Investimentos; onboarded 1,200 smallholder farm policies in Mato Grosso.
FRAUD EXPOSURE
La Niña drought triggered R$19M in payouts against R$6M premiums collected; actuarial model failure exposed.
SHUTDOWN
Wound down after reinsurers withdrew October 2022; remaining policyholders transferred to government PROAGRO scheme.
Full Analysis
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Documented cause
IndexPact raised R$28M ($5.6M) from Barn Investimentos in 2021 to sell parametric drought insurance to soy and corn smallholders in Mato Grosso. The 2022 La Niña drought triggered mass payouts far exceeding actuarial models—losses reached R$19M against R$6M in premiums collected. Co-founder Carlos Drummond admitted the NDVI-based trigger models were calibrated on only four years of historical data. Reinsurance partners withdrew in October 2022 and the firm was wound down in March 2023.
Lesson
“Parametric agricultural insurance requires at minimum 30 years of calibration data; never launch with less.”