Johannesburg, 20 Apr 2023
Crop insurance – a critical part of the food supply chain – is becoming more efficient and data-driven, thanks to smart dashboards and BI tools.
Willie du Plooy, Managing Director of Gemoedsrus crop insurers, explains that crop insurance is a crucial lifeline for farmers, who generally don’t have the resources to survive one bad crop. However, only around 40% currently insure their crops.
“Many farmers in southern Africa cannot afford crop insurance, since it is not government subsidised in Africa. In many other nations such as the US, it is heavily subsidised by governments,” he says.
The UN Food and Agriculture Organization (FAO) notes that crops are increasingly at risk owing to climate change, which is fanning the spread of pests and increasing floods, drought, diseases and wildfires, and putting least developed countries’ agrifood systems in jeopardy. FAO and World Bank have highlighted insurance as a measure to help improve agricultural resilience.
Matthys Marais, Director at software development company Incasu, says: “Crop insurance is a fairly unknown type of insurance and is, unfortunately, undervalued in South Africa. However, it supports food security.”
He explains that without crop insurance, farmers who lose a crop owing to drought, excess rain, fire, frost or pests like locusts risk crippling losses. Many farmers have heavy debt, so they cannot afford a single bad season. Those adequately covered by crop insurance are able to protect their livelihoods and – if an incident occurs early in the season – also potentially replant that year’s crop.
Matthys Marais explains that the agricultural insurance sector is subject to the same seasonal impacts their customers are. He notes that crop insurance is complex – some years are good and some are not. Therefore, insurers must harness digital technologies that allow them to operate as efficiently and cost-effectively as possible.
Marius Marais, co-founder of MJR Solutions – developer of the AgriHost software platform and underwriting system with Insight BI software by Incasu – says digital solutions reduce the resources needed and costs involved in agricultural insurance. AgriHost – the first solution of its kind in the world – is a digital suite of applications for fast and accurate crop insurance underwriting, loss adjustments, reporting and forecasting.
Moving to digital simplifies what can be a complicated loss adjustment process. Marius Marais explains that insurance premiums and coverage are based on the field’s size and crop type, among other factors. “A farmer might have a variety of different crops on different fields. Just capturing all this information used to take all day. Now, the app calculates it all in real-time.”
Du Plooy says that, where previously, a loss adjuster would have had to capture data on paper, then spend hours doing calculations and send them to headquarters for claims processing, using a centralised platform slashes the time taken for these processes. “The technology helps keep our costs down,” he says. “We can run with fewer people and greater accuracy and save at least 7% in costs. Using an app, as you do the work, it sends it up to the server at the HQ site and we can process a claim in as little as one hour, whereas it previously took two weeks to finish a claim. For the farmer, it’s a faster return of his money – he can get a payout in as little as a week.
“We can capture the data on a per-field level based on geolocation. In the past, if a farmer complained that the assessor wasn’t in the field, it was hard to prove that he was. However, now we have GPS co-ordinates and time stamps to track where they were, so we are more transparent. We can capture and analyse data per region, review historical trends and inform risk management and forecasting,” Du Plooy says.
Building on this digital foundation, BI could also be used to map trends over time, as well as being deployed to help farmers manage risk and improve their planning and forecasting, Matthys Marais adds.
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