Tech Plants Its Seeds in Farming
Agritask is an agrigulture-management platform that integrates various data sources into an intelligence ecosystem for farmers.
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.
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.
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.