Munich Re said Tuesday that it’s working with digital agriculture company Farmers Edge to “transform” parametric insurance for crop growers through unique, farm-specific technology that can detect weather-related claims and trigger instant payouts.
The world’s second-largest reinsurer and the Canadian agtech said the deal would make parametric coverage more scalable and profitable for all involved by combining precise data from weather stations at individual farms with artificial intelligence and weather-related analytics, such as daily satellite imagery.
Munich Re’s Head of AgRisk Partners Rainer Hartmann said the partnership brings “an important piece to the table” in the reinsurer’s “longstanding tradition” of protecting businesses against agricultural production risks.
Noting the EUR 7 billion ($8.3 billion) in damage caused by European droughts in 2017 and 2018, the company also offers index insurance products to hedge against risks stemming from weather and crop shortfalls, for example.
“Our aim is to improve the access to required coverages by extending the boundaries of insurability,” Hartmann said. “The performant accessibility to accurate data allows the design of individual coverages on a parametric basis addressing the specific risks and helping commercial operations to manage their exposures.”
To protect against high-intensity and catastrophic losses, agricultural parametric insurance covers areas like excess moisture or heat that are excluded from all-risks indemnity policies. But insufficient publicly available data means the policies can be risky, the companies said.
Farmers Edge CEO and co-founder Wade Barnes, a farmer himself, said the collaboration “completes the missing piece of the longstanding parametric puzzle — controlling risk with better data — and gives insurers a clearly defined competitive advantage to attract new customers and enrich existing relationships.”
“By working together, we’re able to bring the highest degree of accuracy available and couple it with intuitive tools to deliver instant payouts and superior risk management solutions that support global sustainability,” he continued.
Farmers Edge says its FarmCommand risk management platform also lowers administrative costs by securely automating things like record-keeping, claim adjustments and crop classifications.
The Germany-based reinsurer is not the only one tuned into parametric insurance’s increasing popularity in the agriculture and critical infrastructures.
Paris-based AXA said last week that it will draw from satellite data and analytics to underwrite climate-related risks for governments and businesses through a new deal with intelligence provider SatSure. The insurance company has called parametrics “a massive trend of disruption for insurance products.”