Nov 23, 2021

The seeds of growth in agri insurance

Article by Hanlie Kroese

Manager Segment Solutions

Santam

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Now’s the time for insurance-specific technologies, intensified focus on AI and strategic partnerships in the agriculture insurance sector. 

With increasingly severe weather, growing political volatility, cyber concerns, and other threats, farmers must continue to invest in their risk preparedness. As the farming industry is disrupted by digitisation, insurers and intermediaries must anticipate emerging risks to remain relevant and be the partner that farmers need. 

For intermediaries and insurers, the focus has shifted to proactive risk mitigation in helping clients predict and prevent losses. The emphasis is on partnering with clients to facilitate collaborative risk management. This means using data to provide granular, customised support to guide client decision-making, risk management best practices, and disaster recovery plans.

What clients want

Today’s insurance client seeks greater risk prevention, ease of doing business, and value-added services. The incorporation of digital platforms in agricultural insurance has the potential to accelerate client records, reduce transaction costs and improve insurance process efficiency. The absorption of technology will enhance the response to external shocks, leading to enhanced stability, growth, and sustainability of agricultural value chains. 

However, clients need to be convinced that new ways of working are beneficial. Worldwide, mobile insurance policies have increased by 68%, however, only 7% of these policies come from the agricultural industry, which indicates an opportunity for growth in the sector. 

The evolution of agricultural insurance

According to Agri Enterprises CEO Omri van Zyl, the farming industry is expected to consolidate in the medium term. In the next 10 to 12 years, there should be greater integration of farming technologies; daily monitoring of conditions in a more developed digital ecosystem; the integration of smart farm equipment like drones; and more regulation driving digital adoption. From an insurance perspective, agents will need to use digital solutions to drive value creation and forge lasting farm relationships. 

Emerging risks will transform the insurance landscape and digital transformation will shape client experience and consumer behaviours, with a focus on simplicity, speed and convenience.

Data will change how we interact, and poor data management will become an enterprise-level existential threat.

Partnerships are pivotal

Going forward, insurers need to pioneer innovative risk-mitigation products that meet changing client expectations, such as Santam’s customised solutions for the modern farmer. Service-based models will be key. 

Insurers will also have to partner with start-ups and insurtech companies to remain relevant, but also to assist farmers with solutions that will enable them to transition from traditional farming to digital farming practices. Technology will also empower intermediaries to aggregate multiple value-added services to best serve a clients’ risk needs. 

As insurers, insurtech and agtech companies merge, there is an opportunity for rapid data collection and assessment. However, this shift to digital comes with risks. The global cyber insurance market is expected to grow by 25% by 2025. This presents an opportunity for insurers and intermediaries to tailor insurance solutions, and help clients navigate a new world.

Now is the time to move beyond insurance. Becoming an everyday adviser means proactively providing guidance on risk mitigation. It means unlocking the power of real-time, personalised data to anticipate what farmers need. It means listening to clients and thinking of innovative, immersive ways to improve client experience. 

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