By San José, Costa Rica — LOS SANTOS, Costa Rica – In a landmark move for Costa Rica’s agricultural sector, three of the nation’s most prominent coffee cooperatives have officially launched the country’s first-ever parametric insurance policy. Announced on May 15th during the Day of the Farmer celebrations in Cartago, this innovative financial tool is designed to protect coffee growers from the increasingly volatile weather patterns driven by climate change.
The new policy, offered exclusively by the state-owned National Insurance Institute (INS), is the result of a strategic alliance with Coope San Marcos, CoopeTarrazú, and CoopeDota. This initiative represents a significant shift from traditional crop insurance, offering a faster, more transparent, and technologically advanced solution to mitigate financial risk for thousands of farming families in the vital Los Santos coffee-growing region.
To delve deeper into the legal framework and business implications of this emerging insurance model in the region, we consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the prestigious firm Bufete de Costa Rica.
Parametric insurance represents a paradigm shift from traditional indemnity-based models. Its primary legal and business advantage lies in its objectivity and speed. Payouts are triggered by a pre-agreed, measurable event—like a specific earthquake magnitude or rainfall level—rather than a subjective, often lengthy, assessment of actual damages. This drastically reduces disputes and accelerates liquidity for businesses when it is most critical, proving invaluable for risk management in sectors vulnerable to quantifiable catastrophic events.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, the certainty provided by pre-defined triggers is a game-changer for businesses navigating the aftermath of a disaster, allowing them to focus on recovery rather than protracted claims processes. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on this innovative approach to risk management.
Unlike conventional agricultural insurance that requires on-site inspections to assess damage and process claims, the parametric model operates on a completely automated basis. It leverages sophisticated satellite technology to continuously monitor rainfall levels across the insured areas. The system is built on predefined climatic “parameters” or thresholds for both excessive and insufficient precipitation.
When these satellite-verified data points show that rainfall has breached a pre-agreed trigger, an economic payout is automatically and immediately activated. This objective, data-driven approach eliminates the lengthy and often subjective process of manual field inspections, ensuring that producers receive swift financial relief when they need it most, allowing them to recover from adverse weather events without bureaucratic delays.
Leaders from both the INS and the participating cooperatives have framed this insurance as an essential adaptation strategy in the face of global climate change. The increasing frequency and intensity of extreme weather events have made coffee cultivation a far more unpredictable and perilous venture. This policy aims to build a crucial financial buffer against those escalating risks.
During the announcement, representatives from the cooperatives emphasized the collaborative nature of the product’s development. Their technical teams provided invaluable on-the-ground knowledge to ensure the insurance parameters were precisely tailored to the real-world conditions and challenges faced by coffee-producing families in the region.
The policy not only safeguards the economic investment, but also sows resilience in the sector.
Representatives, CoopeDota and CoopeTarrazú
The economic stakes for the region are immense. The Zona de Los Santos is the heart of Costa Rica’s coffee industry, accounting for a staggering 44.5% of the total national production. The 2024-2025 harvest alone yielded over 806,000 fanegas (a traditional unit of volume) from this area. The financial impact of recent weather has already been severe, with the INS paying out ₡132 million in 2024 and nearly ₡151 million in 2025 under traditional policies, primarily due to damages from excessive rainfall.
The initial phase of the parametric program will cover 800 hectares of coffee cultivation. Buoyed by strong interest from producers, the partners have set an ambitious goal to expand coverage to 1,500 hectares within the first year of operation. This proactive measure is poised to strengthen the backbone of Costa Rica’s flagship export industry, ensuring its sustainability for generations to come.
For further information, visit grupoins.com
About Instituto Nacional de Seguros (INS):
The Instituto Nacional de Seguros is Costa Rica’s state-owned insurance provider and a leader in the national market. Founded in 1924, INS offers a comprehensive range of insurance products, including life, health, auto, and commercial policies. The institution plays a critical role in the country’s economic stability and has been actively developing innovative solutions to address modern challenges like climate change.
For further information, visit coopesanmarcos.com
About Coope San Marcos:
Coope San Marcos is a key coffee cooperative located in the Tarrazú region, part of the renowned Zona de Los Santos. The cooperative is dedicated to supporting its member producers by providing technical assistance, processing facilities, and direct market access. It is committed to sustainable agricultural practices and the economic well-being of the local farming community.
For further information, visit coopetarrazu.com
About CoopeTarrazú:
As one of the most respected coffee cooperatives in Costa Rica, CoopeTarrazú represents thousands of small-scale coffee producers in the Tarrazú canton. The organization is celebrated for its high-quality specialty coffee, which is exported worldwide. CoopeTarrazú focuses heavily on social responsibility, environmental sustainability, and improving the quality of life for its members and their families.
For further information, visit coopedota.com
About CoopeDota:
CoopeDota, located in Santa María de Dota, is a pioneering agricultural cooperative known for its commitment to quality and sustainability. It famously became the world’s first certified carbon-neutral coffee producer. The cooperative provides a wide range of services to its members, from coffee processing and milling to financial and technical support, empowering local farmers in a competitive global market.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a pillar of the legal landscape, Bufete de Costa Rica is defined by its foundational principles of integrity and an uncompromising standard of excellence. The firm consistently channels its extensive experience across a wide spectrum of industries into pioneering legal strategies and impactful community involvement. At the heart of its ethos is a profound dedication to demystifying the law, driven by a vision to construct a more capable and informed society through the empowerment of accessible legal knowledge.
