Tech Plants Its Seeds in Farming

How does the Agritask platform change risk mitigation for farmers and insurers?

The Agritask platform offers real-time visibility of the field in a very efficient way. This includes various layers of intelligence with regard to the status of the crops. It enables the farmers—and farmers are only one type of users of the platform—to react quickly, to make their work more efficient and also to mitigate certain risks that they couldn’t have identified prior to this. Ultimately, in an insurance context, it is quite evident that there is a clear correlation between lower insurance costs and better production in the context of yield. Once farmers make better usage of their fields and their plots, that inevitably impacts insurance and ultimately reduces the cost of insurance.

Could you give us an example?

Without the platform, even in simple cases, the farmer’s practices and the management of the various chemicals that have been used were not really conducted in a rigorous manner. They use a lot of intuition and accumulated experience and utilize it on an ad hoc basis. The platform allows them to systematically monitor various practices and get insights into which are the right ones. With the satellite images, they can map the field into various areas based on the corresponding risks those areas represent and basically reallocate their resources and chemicals in a manner that will enable improved production. While this is not directly related to insurance, implicitly improved yields ultimately reduce insurance costs under certain contexts. It’s really a win-win situation for farmers and insurers.

What impact does this have on risk analysis for insurers?

The platform and its IT architecture support the gathering of a significant amount of information in one database derived from various sources—both public sources and also client-related sources. This includes soil data, weather data, input data or farm management and yield practices. Simply put, this is a one-stop shop for all information. It can be done on a dynamic basis, which allows the data to be reviewed historically, and can also be done on a very granular plot level. Ultimately, you come up with a unique risk signature for every relevant plot. This is something that to our knowledge no one in the world currently does. The fact that you’re able to create a very accurate risk profile on a plot level enables the insurance companies to establish a more accurate actuarial pricing framework. It enables the insurance companies to have a much better profile of their own exposures. One of the goals of the platform is to capture all characteristics which are vital for scientific pricing.

It is reminiscent of what happened in the property catastrophe space decades ago. Thirty years ago or so, the exposure data based on the properties themselves were not captured in an accurate way in the property catastrophe space. The name of the client and the insured property would appear, but all other risk characteristics would not be displayed.

Hurricane Andrew in 1992 changed the history of the property catastrophe space. A certain number of insurance companies in Florida went bankrupt, and this was directly linked to risk management, exposure management, and the pricing regime. They simply underestimated the risks. We believe that there are a lot of similarities between the situation in the early ’90s in the property catastrophe space and what exists today in the agricultural space. We think insurers in the agri-insurance space must use technology in order to amass the data in a more accurate way and ultimately come up with better risk management practices and more innovative products. This is exactly our goal in the space.

Which countries are you active in?

We are currently focusing our efforts on the insurance side in emerging markets; this includes various countries in South America and in Africa. The level of (insurance) penetration in Africa is extremely low, and this must be taken into account. Often, people simply don’t know anything about insurance; nevertheless, they are exposed to insurance-related risks. If crop production does not meet expectations, it can lead to negative consequences.

In this instance, the importance of pricing and the tailoring of user-based insurance products is crucial. Every cent the farmers—or the aggregators that represent them—pay is crucial due to the low income levels in these countries. The more accurately we can characterize the risk profiles of the exposed area the more successfully we will be able to price and tailor the products.

Obviously, the insurance companies in these countries want to have a proper margin. But if you want to know what the margin is, you need to accurately assess the risks—something that is not occurring at present anywhere in the world. This leads to successful and failing farmers paying the same price for the same product. That is not how it is supposed to be. Our platform is in essence an operating system that provides an end-to-end solution for the insurers, especially to new insurance companies that are interested in the agri-insurance space. It collects all the relevant practices in the agri-insurance value chain, from the data collection to underwriting, the monitoring of potential claims, claims management, and the work of loss adjusters.

What kind of technology are you using to collect data—satellite imagery, drone imagery?

Our platform essentially acts as a database which can be an integrator for all types of technology. We have various partners from the satellite field and others that work with drones. The big advantage of our platform is that it can collect all layers of varying sources of information into one place and then facilitate the analytics and the business insights that are taking advantage of these layers of information. We do not develop the satellite technology, but we deploy it in a very efficient manner. The technology is integrated with all of the IT components, and then the platform is capable of making conclusions to help improve decision making in the agricultural and the agri-insurance space.

What insurers are you working with?

Our key focus is in the emerging markets, and we tend to work with developed agri-insurance providers who have been working in this space for decades. They understand that they need to adapt their business model as a result of the introduction of new technology. Typically, this might be international insurers or reinsurers with a presence in South America or Africa. On the other hand, we also work with relatively small local insurers that need advice on the actuarial know-how, the overall design of the product, and require an end-to-end operating system that will enable them to actively and efficiently work in this space.

It’s really a broad range of insurers in emerging markets. At the moment our key clients are in Africa and South America, but we are also looking to expand to other markets in Central and Eastern Europe and also South East Asia.

What is the impact on farmers?

The impact on the farmers is life changing by helping them be less vulnerable financially to natural disasters and other weather events. Our platform, and our very active interaction, enable the various insurance companies in places like Africa to reach out to the farmers and explain why insuring their assets—crop production—is so important for them. We believe this leads to a real financial change for farmers who utilize insurance companies, the focus of our efforts.