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Proactive and integrated Agri insurance solutions for a sustainable farming sector

13 November 2013 Andries Wiese, Mutual & Federal Agri
Andries Wiese, Manager for Market Intelligence and Marketing at Mutual & Federal Agri.

Andries Wiese, Manager for Market Intelligence and Marketing at Mutual & Federal Agri.

According to the Department of Agriculture, Forestry and Fisheries, when the entire value chain of agriculture is taken into account, the sector contributes about 12% to South Africa’s gross domestic product and represents about 7% of formal employment. Agriculture also plays a key role to ensure food security in South Africa and the broader continent – for example, South Africa is the main producer of maize in the SADC region.

It is clear then that the sustainability of this sector is key to local and continental economic socio-development growth.

The short-term insurance industry plays a crucial role towards the sustainability of farming as an enterprise activity. Insurance companies replace or restore damaged or lost property (assets), crops, livestock or valuables after a theft, weather or fire claim. Even more important for the sustained financial and operational performance of farms is the ability to mitigate risks and prevent losses from occurring in the first place – untimely and preventable losses pose business continuity risks when you consider the opportunity-costs while claims are being settled. Also, numerous and preventable claims are not financially sustainable as most premiums tend to increase with every claim.

Within this context, Mutual & Federal Agri has adopted a proactive underwriting approach where they partner with farmers to avoid preventable losses and ensure long-term financial prosperity.

According to Andries Wiese, Manager for Market Intelligence and Marketing at Mutual & Federal Agri, while most agri insurers interact with clients during the claims stage when they have to assess or pay claims, Mutual & Federal has evolved its product development process to start the underwriting phase at the farm, interacting with the farmer and the broker who deals with the farm’s daily needs.

”This proactive approach to underwriting risk offers famers a real partnership to help protect what is important to the farm business, rather than suffering further business loss and having to go through a preventable claims settlement process,” Wiese says. "Insurance policies clearly state that the insured has the responsibility to prevent a loss from happening. Many losses can be prevented this way. However, these often have a financial implication for the client as these measures can be very costly. A natural progression for us was to look for ways to assist farmers in prevention and mitigation of losses. This type of thinking is progressive and ahead of the market, illustrating our commitment to the realities that farmers face and turning setbacks into comebacks,” Wiese adds

He pointed to the following examples of the innovative cover offered by an Agriplus policy in this regard:

• Managing the environment responsibly by removing trees that are threatening to fall on buildings, creating fire breaks, or in a serious case covering fire-fighting costs and aerial water bombing to prevent fires from spreading to other farms;

• Focusing on livestock needs such as covering veterinary costs to save animals after a fire or the automatic inclusion of droving of animals in terms of the liability policy;

• Covering farm equipment with precision farming technologies for electronics, which no insurer would normally cover, transit cover for property whilst being transported on the farm or the cost of temporary repairs to vehicles to assist with safe passage home to prevent additional exposure to vehicles and occupants to further loss;

• Labour relations advice and management services.

Wiese says these offerings are in line with the overall Mutual & Federal client-focused philosophy where the aim is to go beyond insurance. "We work on an ongoing basis with farmers to address specific areas of concern. For example, where legislative criteria impact on farmers, we combine forces to support organized agriculture and raise issues with the relevant state departments to find equitable solutions. Where these are not forthcoming, we apply logic and expertise to craft workable insurance solutions.”

He concludes: "Mutual & Federal’s focus on individual client needs and treating customers fairly by facilitating cover that makes sense, creates a real partnership in loss prevention and protection of what is important to the farmer. Placing the client in a position where he does not need to suffer any loss is a real value proposition and indicative of our commitment to the protection of what is important to our clients.”

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