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As agriculture continues to digitize, new ecosystems of players are forming, offering farmers seed-to-market services. Creating or participating in these ecosystems offers insurers significant opportunity. For agri-insurers, their partner ecosystem will be a differentiating factor and a source of competitive advantage.
Digital-agriculture ecosystems enable precision farming – they help farmers bring together data to smart equipment, sensors, satellites, weather and other services to maximize efficiencies, cut costs and improve outcomes. For agri-insurers, these ecosystems not only offer the opportunity to innovate and develop new, more relevant solutions; they also transform relationships with customers.
Through trend data, realtime inputs and improved analytics, the farmer gains a deeper understanding of risk and can take action to address those risks and amend his cover. For the insurer, better data inputs and analytics provide the means to help prevent loss and reduce claims, and adjust premiums dynamically. This is contributing to the growing interest of growers in the value proposition of effective solutions that cover the entire job cycle to seed to harvest.
Who is doing it?
In Europe, 365FarmNet is a web-based software solution for farmers offering crop planning, yield projection, livestock management and operations analysis. It brings together farm equipment makers Claas, Rauch, Horsch and Amazonen-Werke, financial services giant Allianz, chemicals company Bayer, seed producer KWS Saat, agricultural software services provider LACOS, agricultural advisory services company Agravis, and the European Global Navigation Satellite Systems Agency. This ecosystem provides farmers with easy access to data and analysis on geo-location, diagnostics, crops, fertilizers, weather and other factors, over smartphones or through direct connections with farm equipment. It also gives them access to innovative insurance solutions.
The partner ecosystems agri-insurers build will be a primary source of differentiation.
Allianz uses 365FarmNet to help insure deviations to predicted crop yields. It draws on open satellite data of the European Space Agency (ESA) to map biomass build-up for the purpose of better realtime risk assessment as well as more efficient and accurate claims assessment. For the insured, this means two things:
- Greater outcome predictability and a better farming input / output ratio;
- Outcome protection priced on actual risk.
Equipment manufacturers are also developing their own ecosystems. John Deere is building intelligence into its large combines, tractors and sprayers and its digital partnerships with companies such as DuPont, Pioneer, Dow Chemical and others help it to supply precision agriculture solutions to growers. It does this by, among others, connecting irrigation systems, soil and nutrient sources with information on weather, crop prices and commodity futures to optimize overall farm performance. It has also recently integrated DroneDeploy drone maps to help users improve crop yields and farming operations.
So how does its digital platform benefit growers in terms of insurance?
John Deere’s technology and processing systems allow for the flow of data to machines to insurance agents. Automated Crop Reporting provides a seamless experience to accurate data collection to claims settlement. In addition, the precision data for crop insurance reporting means growers only pay insurance premiums on the acres they farm, not the non-crop land acres.
From traditional insurer to risk manager and everyday advisor—the agri-insurer’s digital journey has just begun.
The journey to digital agri-insurance
Digital transformation in this sector affects agri-insurance companies too. The journey, or evolution, is exciting.
- The traditional insurer is typically a standalone player. By offering traditional products and providing discounts if “risk-reduction” Internet of Things (IoT) services are used, it takes a step toward becoming a risk manager.
- Risk managers are ecosystem players that offer growers digital products based on “flows of data”, with premiums linked to the evolution of risk exposures.
- The discrete, everyday risk manager and advisor describes the agri-insurer that is a deeply integrated ecosystem player with a mandate to manage risks. This insurer will define business not through claims but in preventing them. And it will be built on a new business model.
With the use of drones and satellite imagery, for example, underwriting becomes simpler. Instead of boots in a field to identify key factors, drones using satellite imagery (including time-lapsed imagery) and data to sensors in the fields can deliver accurate information about field and crop conditions that directly inform cover. That same data informs the farmer, assisting with the management of risk. And it works for different kinds of farming, to a citrus farm to a wheat crop where greening and crop density provide insights and alerts, to livestock farming where tracking technology can identify grazing patterns and sick or strayed animals.
Insurers hoping to participate in the evolving digital-agriculture market will need to develop an IoT strategy as part of their digitally-enabled business strategy.
Key questions to ask:
- What lines of our business can benefit most to the IoT today?
- What data is most influential and what business model should we pursue to make use of it?
- What are the necessary ecosystem partners or IoT data providers we want to work with?
- What are the most promising product ideas and their minimum viable products?
- What governance needs to be established around our IoT ideas, products and services?
Join me next week as I look at the technologies that are addressing the key challenges agri-insurers and growers face, and how leading ecosystem players—agri companies, governments and insurers—are building and refining their roles in digital-agriculture ecosystems.
Learn more about Accenture’s Digital Agriculture Service, the Accenture Precision Agriculture Service and the Accenture Connected Crop Solution.