The future of insurance in South Africa’s agricultural industry

Hanlie Kroese, Manager Segment Solutions at Santam

With increasingly severe weather, growing political volatility, cyber concerns and other threats, farmers need to continue to invest in their risk preparedness.

As the farming industry is disrupted by digital, insurers and intermediaries must anticipate emerging risks to remain relevant and be the partner that farmers need. Now’s the time for insurance-specific technologies, intensified focus on AI and strategic partnerships.

For intermediaries and insurers, the focus has shifted to proactive risk mitigation to assist clients to predict and prevent losses. The emphasis is on partnering with clients to facilitate collaborative risk management. This means using data to provide granular, customised support to guide clients’ decision-making, risk management best practices and disaster recovery plans.

What clients want
Today’s insurance client seeks greater risk prevention, ease of doing business, and value-added services. The incorporation of digital platforms in agricultural insurance has the potential to accelerate client records, reduce transaction costs and improve insurance process efficiency. The absorption of technology will enhance the response to external shocks, leading to enhanced stability, growth, and sustainability of agricultural value chains.

However, clients need to be convinced that new ways of working are beneficial. For example, worldwide, the issue of mobile insurance policies has increased by 68%. However, only 7% of these policies originated from the agricultural industry, indicating a favourable opportunity for growth within the sector.

The evolution of agriculture – and agricultural insurance
According to Omri van Zyl, Agri Enterprises, the farming industry is expected to consolidate in the medium term. In the next 10 to 12 years, there should be greater integration of farming technologies, daily monitoring of conditions via a more developed digital ecosystem, the integration of smart farm equipment like drones, and more regulation driving digital adoption. From an insurance perspective, agents will need to use digital solutions to drive value creation and forge lasting farm relationships.

Emerging risks will transform the insurance landscape and digital transformation will shape customer experience and consumer behaviours with focus on simplicity, speed and convenience.

Data will change how we interact, and poor data management will become an enterprise-level existential threat.

Partnerships are pivotal
Going forward, insurers need to pioneer innovative risk-mitigation products that meet changing client expectations, such as Santam’s customised solutions for the modern farmer. Service-based models will be key. Additionally, they’ll need to partner with dynamic start-ups and Insuretech companies to retain relevance and assist farmers with the solutions required to smoothly transition from traditional to digital farming practices. Technology will also empower intermediaries to aggregate multiple value-added services to best serve a clients’ risk needs.

As insurers, Insuretech and Agtech companies merge, there’s the opportunity for data to be collected and losses assessed at a rapid rate. However, the move to digital comes with risks. Global cyber insurance is expected to reach up to 25% growth by 2025. This presents another opportunity for insurers and intermediaries to tailor-make insurance solutions to help clients navigate a new world.

Now is the time to move beyond insurance. Becoming an ‘everyday adviser’ means proactively providing guidance on risk mitigation. It means unlocking the power of real-time, personalised data to anticipate what farmers need. It means listening to clients and thinking of innovative, immersive ways to improve customer experience.