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Insurer reaps the rewards of innovation in Agri insurance
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 King Price is 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.
In 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, says King Price’s agri partner, Kobus Stapelberg. “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, Stapelberg believes 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. The insurer is also seeing a steady uptake of its 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,” said Stapelberg. The farmers also benefit from knowing where all their vehicles are in real-time.
King Price takes its partnership with SA’s farmers seriously, and is becoming increasingly involved in farm security, with one of its products offering comprehensive cover on the camera systems that are used widely in farming communities. The insurer is 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.
Stapelberg says the company’s 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 to our farmers, and helping them manage their own risks better, they’re able to farm more effectively and save money on insurance, which is often seen as a grudge purchase,” said Stapelberg.
