Allianz Africa to leverage state-of-the-art Satellite information among others, for the digitization of insurance in Agriculture

Allianz Africa on March 24 held its second webinar on “The Digitization of Agriculture Insurance Through Parametric Solutions” in partnership with Allianz Re. as it prepares to expand its presence in the East African insurance market.

This comes after the digital session held in December 2020 on the topic of “Vaccine Economics, Trade, China and Growth in Africa” with Chief Economist at Allianz SE, Ludovic Subran.

The web-based event aimed at sharing with stakeholders pan-African solutions that the Allianz Group can offer through its footprint in Africa and brought together insurance experts such as Reto Schneider, Regional Head of Agriculture at Allianz Re, Lovemore Forichi, Senior Underwriter of Agriculture at Allianz Re, Gregoire Tombez, CEO of WARM Consulting Group Ltd and Co-founder of Green Triangle, Erastus Ndege Ochieng, Asset Manager, Agriculture Underwriting at Africa Re, Omondi Kasidhi, Head, Sustainable Agriculture Sourcing of Diageo PLC and Delphine Traore, COO of Allianz Africa.

The conversations revolved around Parametric solutions being presented as the direction for the future as deep conversations were shared tackling a number of their advantages such as high accuracy with state-of-the-art satellite information, hybrid products to address additional perils, increased efficiency through fully paperless processes, fast and automated payouts possible, high level of traceability, combination with loans and integration of the value chain.

“There is an ever increasing need to invest in agriculture, given it’s vital importance as a food source, especially in view of the increase in global population”, affirmed Delphine Traoré.

“Indeed, agriculture production makes up a substantial portion of the continent’s GDP in Africa, yet only a small portion of the producers are insured. Raising awareness of the vital role that agriculture insurance plays in sustaining production is a key step to increasing insurance penetration in the sector.”

Delphine added: Allianz Africa aims to contribute towards closing the protection gap and position itself as a leading agriculture (re)insurance provider on the continent, plus climate risks increase the need for investments to make agriculture more resilient.

According to Reto Schneider, “the agricultural sector in the insurance industry could reach the potential of 1bn USD within 10 years, provided that penetration can be substantially increased.”

Justifying the technology, Gregoire stated that “despite certain limitations technology is closing the gap between indemnity and parametric crop insurance and allows getting the best of both worlds in a single product”.

The panel’s experts agreed that the development and commercialization of agriculture requires financial services that can support to this end, agricultural insurance strategically for eradicating extreme poverty, boosting prosperity and protecting livelihoods.

In 2020, the insurance industry recorded a cumulative premium of approx. 300mn USD from agricultural insurance. The Southern and Eastern regions of Africa contributed more than 80% of the recorded premium with Eastern Africa recently recording an improvement in its trajectory.

To have reliable parametric systems that provide efficient solutions, the panel emphasized the necessity to bring significant improvements through product suitability, affordability, value chain efficiency, distribution, information and training.