Expanded insurance could help manage climate risks to dairies

Extreme heat poses a significant challenge for dairy and cattle producers, affecting animal health, milk production, and overall farm profitability. Prolonged exposure to high temperatures can lead to heat stress, which reduces feed intake, lowers fertility rates, and increases the risk of illness and mortality. Recent University of Illinois research pinpointed heat stress to leading to a 1 percent annual decline in U.S. dairy milk yield, equating to $245 million in losses over five years.

In response to these challenges, AIR Parametric Inc. is expanding its heat stress insurance product, Milkshake, in 2025 to offer broader financial protection for livestock operations. Following a successful launch in 2024, the parametric insurance solution will now be available to more distributing partners, making it more accessible to producers seeking coverage against extreme heat events.

By providing payouts based on temperature thresholds rather than traditional claims processes, the aim is to deliver timely financial support to producers navigating the risks of a warming climate.

“Heat stress is one of the most pressing challenges for dairy and cattle producers today,” said Jamie Luce, CEO and Co-Founder of AIR Parametric. “Prolonged periods of high temperatures impact milk production, fertility, and overall herd health, creating serious financial strain for farmers. By expanding our coverage options, we are helping producers mitigate these economic risks in a way that traditional insurance has struggled to address.”

Originally designed to cover prolonged seven-day heat stress events, Milkshake will now offer shorter coverage periods of three and five days, allowing producers to protect themselves against more frequent temperature spikes. The expanded policy also includes three customizable trigger options, giving farmers the flexibility to align coverage with their specific risk management needs.

“Extreme heat doesn’t just cause immediate production losses—it creates long-term economic consequences,” said Ed Yorty, AIR Parametric investor and Head of Product. “Reduced feed efficiency, increased veterinary costs, and lower reproductive success rates can add up to substantial financial setbacks. Our goal with Milkshake™ is to provide a proactive solution that helps producers recover from these challenges before they escalate into larger financial burdens.”

The insurance product uses AIR Parametric’s advanced weather data, engineering expertise, and machine learning capabilities to pinpoint specific weather conditions that trigger payouts. This approach allows producers to receive timely financial support without the need for traditional loss assessments.

Climate projections suggest extreme heat days will become more frequent, increasing milk yield losses by 30 percent by 2050.

“When I ask producers how extreme weather impacts their business, the answers go beyond the obvious,” Luce added. “Events like excessive heat don’t always cause physical destruction, but they do disrupt production cycles and create financial instability. With the rise of heat domes and unpredictable temperature swings, farmers need insurance solutions that account for these real economic losses.”

As climate volatility continues to challenge agricultural operations, AIR Parametric remains committed to delivering innovative risk management solutions. With its 2025 expansion, Milkshake aims to provide dairy and cattle producers with greater financial security, ensuring they can weather the impacts of extreme heat without jeopardizing their livelihoods.