Delivering solutions on the ground
How Swiss Re solutions help cover farmers' production and financial risks.
Kazakhstan - soil moisture index powers drought insurance
The Kazakhstan government fully supports the development and digitisation of the country's agricultural sector. Its "Digital Kazakhstan 2020" project requires that 150,000 farmers register their fields, planted crops and machinery used on an online platform managed by the Ministry of Agriculture. Employing blockchain technology, the Ministry uses this platform to administer government subsidies, insurance payments and bank loans to farmers.
The frequency and severity of droughts in Kazakhstan have been rising over the last decade and forecasts say this trend is unlikely to change. This exposes farmers' crop yields and consequently their whole livelihoods to grave risk. Collaborating with the Dutch private data provider Vandersat and the Kazakhstan government, Swiss Re has designed a satellite-based soil moisture index. This tool makes available daily readings of global soil moisture data at a resolution of 100m x 100m. The product is transparent and easily scalable. Soil moisture during the growing season can easily be monitored from space. Should a drought affect crop production, the parametric mechanism enables a rapid reaction and immediate payouts for farmers. Moreover, because the insurance process is fully digital, it also reduces operational costs.
France – Europe's first revenue index insurance
The agricultural supply chain has to deal not only with increased crop shortfall risk due to bad weather, but also with heightened price risk. In France, large cooperatives or food processors already hedge their price risk by trading futures contracts and options on Euronext. For smaller players unable to open a position due to insufficient capacity, or for those just wanting a convenient cover for price and crop shortfall, revenue insurance could be the sensible way forward. In 2013, Swiss Re launched the first revenue insurance in France, where we insured 10 000 ha of land. Up to 2019, in collaboration with several insurers and Farm Cooperatives, we have developed revenue insurance products covering almost 100 000 ha for crops such as corn, wheat, barley and rapeseed.
Taiwan - airborne loss adjustment
Swiss Re not only fosters innovation with parametric solutions but also seeks improvements in reliable and scalable loss adjustment processes for classical indemnity insurance. In Taiwan, typhoons pose a threat to banana production. To assess the damage in the most accurate and efficient way, drones take pictures while flying over the plantations. In 2018, partnering with one of our clients, we launched a novel plant insurance in Taiwan, which already covers an area of 500 ha with an insurance sum of USD 4.5 mio. With drones capable of flying over 600 ha per day, loss adjustment can be conducted faster. Consequently, insureds only need to wait a few days before receiving their pay outs.