Daniel Stevens, Executive Head, Agriculture Insurance, Santam.
Agriculture is one of the most vital sectors in South Africa, contributing significantly to food security and economic stability.
Yet, it is also one of the most unpredictable industries, heavily influenced by weather patterns, pests, and global market dynamics. The role of agricultural insurance, therefore, becomes indispensable in mitigating these risks and ensuring the resilience of farming operations.
The Unique challenges of crop insurance – Crop insurance is a specialised form of coverage that protects farmers against losses due to natural disasters such as droughts, floods, and hailstorms. However, it’s not just about insuring against total crop failure. A damaged crop, for instance, might still grow to maturity, albeit with a reduced yield. The challenge lies in accurately assessing this potential yield and compensating farmers accordingly.
This is where agronomists play a pivotal role. They provide the expertise needed to estimate the harvest potential of damaged crops. Their input helps insurers like Santam to create fair and reliable insurance solutions for farmers. Such accuracy ensures that farmers receive compensation that reflects the actual losses they incur.
Brokers are essential intermediaries in the agri-insurance value chain, helping to connect insurers with farmers. Despite their importance, there is a notable shortage of brokers specialising in agricultural insurance. While 90% of Santam’s agricultural insurance business is broker-driven, many of these brokers operate within cooperatives. These cooperatives often offer a bundled package of services, including financing for seeds, fertilisers, and farming equipment, along with insurance.
Independent brokers also play a significant role, especially in rural areas where they maintain close relationships with farming communities. However, agricultural insurance remains a niche market compared to personal and commercial insurance. For context, the total premium in the agricultural insurance sector is approximately R2.7 billion, a fraction of what the personal and commercial markets generate.
Given the seasonal nature of agriculture, brokers must be well-versed in the intricacies of crop insurance. Santam invests heavily in training and accrediting brokers to ensure they are equipped to provide accurate advice and support to farmers. Our area managers play a critical role in this process, conducting training sessions and providing ongoing support to brokers throughout the year.
Crop insurance sales align with planting seasons, with winter crops being insured from May to August and summer crops from October to December. During these periods, brokers undergo intensive training to meet regulatory requirements and stay updated on product offerings. This ensures that farmers receive comprehensive advice tailored to their specific needs.
Farming with the sun or the land?
Pick an insurer that understands both.
Farming looks very different today. Shouldn’t your insurance too?
As a market leader with over 105 years of experience and a nationwide infrastructure, you can count on Santam to adapt to whatever comes next
To find out more about our agriculture insurance, speak to your intermediary or visit santam.co.za/products/agriculture.
Santam is an authorised financial services provider (FSP 3416),
a licensed non-life insurer and controlling company for its group companies.
Supporting farmers through loss adjustments – Loss adjustment is another critical aspect of agricultural insurance. It involves assessing the extent of damage to crops and determining the appropriate compensation for the farmer. This process requires a nuanced understanding of agricultural practices and the impact of various risks on crop yields. Loss adjusters, often specialists with backgrounds in agriculture, are integral to this process.
Some loss adjusters transition into brokerage roles, bringing their expertise to bear in advising farmers on insurance options. This dual perspective enhances the value they provide, helping farmers make informed decisions about risk management.
Cooperatives remain a cornerstone of agricultural insurance in South Africa. By offering integrated services, they provide farmers with a one-stop solution for their financial and insurance needs. Santam collaborates closely with cooperatives, supporting their efforts in risk management and providing training to their teams. This partnership ensures that farmers receive the resources and knowledge they need to protect their livelihoods effectively.
Our area managers work tirelessly to support cooperatives and brokers. They play a crucial role in fostering strong relationships, conducting training, and ensuring compliance with regulatory requirements. By empowering brokers and cooperatives, we can extend the reach of agricultural insurance to more farmers across the country.
The Future – As the agricultural sector evolves, so too must the insurance solutions that support it. Climate change, in particular, presents new challenges, with extreme weather events becoming more frequent and severe. Innovative insurance products and advanced risk assessment methods will be essential to address these emerging threats.
The agricultural insurance market has significant growth potential, but this requires a concerted effort from all stakeholders. Insurers, brokers, cooperatives, and regulators must work together to expand access to insurance, improve financial literacy among farmers, and develop products that address their unique needs.
Agricultural insurance is more than just a financial product; it is a lifeline for farmers navigating the uncertainties of their profession. By fostering collaboration, investing in training, and leveraging expertise, we can build a resilient agricultural sector that continues to thrive despite the challenges it faces.
As we host industry events and engage with global stakeholders, our goal at Santam remains clear: to champion the South African agricultural sector and ensure its long-term sustainability.