The challenge of agricultural insurance and the room for innovation

About two years ago, a client from the agribusiness sector shared with me his dissatisfaction regarding the insurance products available to this market and this planted a seed that I have been carefully watering ever since, day by day.

Ingrid Gregorio, Risk and Insurance Manager at Horiens Risk Advisors

We, in the insurance industry, know that agricultural insurance, while essential for agribusiness, needs to evolve into a really effective format that is actually adherent to the reality of the field.

Climate change is one of the greatest challenges facing agribusiness today.  In Brazil alone, droughts have generated billions of reals in losses in the last few years. This scenario of uncertainties increasingly affects producers, who should find in the insurance market an efficient way to reduce financial losses.

However, this is not what happens. What we observe, in fact, is a low adhesion to agricultural insurance, with only 20% of cultivated areas in Brazil insured, and this is largely due to the offer of standardized insurance products with limited coverage, which end up making the regulation of claims complex, costly, and not very transparent.

In search of a solution
Complicated scenario, right? For it was from the will and determination to create a solution that could improve the Brazilian agricultural insurance scenario that I have traveled an incredible journey together with other professionals in the industry who were also motivated to water this initial seed.

Our focus has been to work on the creation of an innovative parametric insurance customized to the reality of each producer, different from anything that exists in the market. Through data science work, we created probabilistic models of high precision that bring as information the expected productivity for the next harvest. From this, it is possible to define the indemnity parameters according to the client’s real risk.

The result is better insurance pricing and more agility and objectivity in the regulation of claims. The learning has been immense, new paths are opening up, and I feel fulfilled for participating in something that is collaborating directly to the evolution of the insurance market. May we always work to bring new perspectives to the agro insurance market!