Insurer reaps the rewards of innovation in agri insurance

Kobus Stapelberg, King Price agri partner

It’s estimated that only 30% of South Africa’s R2.5 billion annual crop industry is typically insured. Most farmers prefer to self-insure – either to reduce costs or because that’s how risk has always been managed in this space. But we are offering farmers an innovative hybrid solution which finds the middle ground between full self-insurance and conventional risk mitigation, and it’s starting to attract interest in the market.

n fact, less than three years after entering the South African agri-insurance sector, King Price is on track to grow its book past the R350 million mark by mid-2022, with more than half of that coming from crop insurance.

Many insurers don’t cover crops because it’s a volatile business. We’re highly dependent on the weather, and due to climate change, we can’t really predict too accurately, so the loss ratios can vary hugely from year to year. What makes our crop product different is that we tailor other alternative risk solutions based on a client’s risk appetite and needs.

As fuel and fertiliser costs continue to soar, I believe that the need for farmers to find ways to mitigate their risks, and to find insurers who are flexible enough to meet their specific needs, is greater than ever before. We are also seeing a steady uptake of our industry-first ‘pay as you farm’ Agri insurance product, which offers farmers comprehensive cover for their Agri vehicles all year round, linked to an annual rebate based on the time that the vehicles are actually used.

Our ‘pay as you farm’ product, which is offered in partnership with FarmSpace and Africa Farmers Network, is specifically designed to help farmers save on their insurance, lower their capital risk and maximise their profits. By tracking when agricultural vehicles are actually used, we estimate that farmers can save up to 30% on their insurance premiums. The farmers also benefit from knowing where all their vehicles are in real-time.

We take our partnership with SA’s farmers seriously, and we are becoming increasingly involved in farm security, with one of our products offering comprehensive cover on the camera systems that are used widely in farming communities. We are also currently working with an industry-wide partnership to uplift development farmers, who typically fall outside the insurance net, and to aid them on their journey to becoming commercial farmers by helping them with risk mitigation.

Our rapid rise in the agri space is due to a combination of building strong relationships with underwriting management agencies (UMAs) and the broader industry, and its growing use of technology and data analytics to offer innovative products.

We still feel there’s a significant opportunity to tailor agriculture insurance products better to fit the individual needs of modern farmers. By being partners with our farmers, and helping them manage their own risks better, they are able to farm more effectively and save money on insurance, which is often seen as a grudge purchase.