The Future of Insurance in Agriculture, with Damon Johnson, Global Ag Risk Solutions
For a traditionally low innovation industry, things are starting to heat up in agricultural insurance.
While it remains something of a black box for many people in agriculture, the forces of climate change and technological innovation are creating the right mix of incentives that could change how the whole industry approaches risk.
This second episode of our exploration of ag insurance (check out the first, a 101 on ag insurance, here!) considers a digitally-native product in the hands of farmers today. Reimagining insurance like this will be the difference between farmers spending hours, days, and weeks dealing with brokers and getting payouts, compared to almost instant quotes, claims, and reimbursements.
In this episode, our guest Damon Johnson, Director of Strategic Projects at Global Ag Risk Solutions, speaks about:
- What incentives are changing to increase the use of more data in agricultural insurance
- How parametric insurance works as an alternative to traditional agricultural products
- What’s involved in developing a parametric product to create new value for customers as well as vendors
- Where digitally-native insurance products might emerge as a value-add for sustainable farming systems and inputs
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Key takeaways
- Ag insurance has been a notoriously low innovation space, but the incentives are becoming stronger to use more data. The industry will trend towards evaluating farmers on how "sustainable" their practices are using farmers' own data and policies will become more tailored and personalized as a result.
- Parametric insurance products will be a big piece of the puzzle. The difference between farmers needing to spend hours with a broker to get a policy, and hours, days, or weeks more getting a payout, versus spending less than ten minutes to get a quote online and getting more or less automatic reimbursements in a matter of days, is a seismic shift.
- Novel insurance products that could be offered as a kind of product add-on for farmers are incredibly interesting. The potential value add to a farmer of getting an insurance product attached to an input is really two-fold-- it would be uniquely well-suited to the product at hand, as opposed to a generic policy, and save the farmer the time and energy they would have spent securing that generic policy.
