Climate change is dramatically reshaping the agricultural landscape, creating new risks for farmers, and forcing insurers to adapt. Extreme weather events like heavy snow, excessive rain, sudden heatwaves, and higher incidences of hail and lightning, are becoming the norm both in and out of season, and are endangering crops, livestock, and livelihoods. As the intensity and frequency of these risks increase, so too does the need for comprehensive, future-forward insurance solutions to help farmers manage the volatility brought about by climate change.
In recent years, unpredictable weather patterns have disrupted traditional farming cycles, leading to significant losses. For example, unseasonal snow can be catastrophic for sheep farmers, particularly those who’ve already started shearing, leaving entire flocks vulnerable to freezing conditions. It’s clear that catastrophe cover which goes beyond traditional seasonal boundaries has become essential.
Weather: It’s a catastrophe
In the case of sheep farming, progressive insurers are developing comprehensive catastrophe policies that cover the traditional winter events as well as extreme weather-related events, like fires, floods and hail, throughout the year. By providing continuous protection and mitigating risks that can strike at any time, insurers are benchmarking best practices in the industry.
Kobus Stapelberg, head of the agri division at King Price Insurance, notes that climate change is also influencing the types of risks that crop farmers face. With hailstorms and flooding becoming both more frequent and more severe, insurance for crops must evolve. “As an example, the citrus farmers in the Western Cape province once considered hail insurance unnecessary. However, recent severe hailstorms have caused significant damage and these farmers are now looking for expanded crop cover solutions.”
Think local; look global
Globally, insurers and reinsurers are recognising the need for innovative, data-driven solutions to help farmers mitigate modern risks. In South Africa, our pioneering ‘pay-as-you-farm’ model looks at the actual usage of precision farming equipment and vehicles, and offers annual rebates where this usage is lower than expected – thus helping farmers to buffer their bottom-lines and budget for additional cover for risks that weren’t evident until recently.
Tech is everywhere
Data and technology are becoming increasingly relevant as insurers race to offer sustainable products that can withstand the demands of the changing climate. Collecting and analysing data on weather trends, equipment usage, and livestock health enables insurers to better understand risks and offer more targeted, cost-effective cover. Stapelberg says that partnerships with manufacturers of precision farming equipment now allow for the seamless integration of the data that underpins potential ‘pay as you farm’ rebates. Previously, farmers needed to have tracking devices installed but they can now save on this cost as well.
Another data-driven innovation uses information inputted into an app by vets across the country, to reveal trends around livestock illnesses and disease. This, in turn, is helping us to structure cover for the real needs of livestock farmers.
Sustainability is where it’s at
However, it’s not just about launching new products. Insurers and their reinsurers must ensure that their offerings are financially viable in the long-term. This commitment to sustainability is crucial in building trust with farmers as they strive to protect their livelihoods.
Looking ahead, insurers must be increasingly agile and innovative, continuously seeking new ways to support the agricultural sector as it grapples with the effects of climate change.
“Climate change is no longer a distant concern for the future. It’s here, and it’s reshaping agriculture,” says Stapelberg.
