Allianz SE Reinsurance | Munich/Zurich | Jul 27, 2011
Allows insured fields to be monitored irrespective of the weather conditions and time of day / Taps into growth markets and increases efficiency on established markets / Makes risk assessment process easier for insurers and reduces the operating costs of crop insurance
"Securing and increasing food production will be one of the main political and social issues facing us in the near future", emphasizes Clemens von Weichs, CEO of Allianz Re. "As with many economic issues, insurance can act as a guarantor for stability and continuity in this area, too."
In this context, Allianz Re's agriculture team is developing a new crop insurance approach in cooperation with the software company Sarmap, which specializes in ways to better manage Earth’s natural resources. In the form enhanced by Allianz Re and Sarmap this radar-based remote sensing software will not only allow biomass growth to be measured, but to monitor and measure the potential yield of agricultural areas. Compared to remote sensing technology that is based on purely optical sensors, the radar technology can convert satellite images into data material of considerable informational value, irrespective of weather conditions and the time of day. This technology will be available exclusively to Allianz Re.
Clemens von Weichs, CEO Allianz Re
"We can quite literally watch the grass grow", says Thomas Heintz, agronomist and Head of Agriculture at Allianz Re, describing how the tool works. "When the European Space Agency (ESA) starts in 2013 to make satellite images available on the Internet on a weekly basis and free of charge, we will have this technology at our fingertips. We can estimate a field's current potential yield and monitor how it develops during the vegetation period - a fundamental prerequisite for multi peril crop insurance." In the event of a loss, the software can be used to determine in detail the cause and impact of the damage. This closes data gaps that have made agricultural insurance difficult, and sometimes even impossible, in many areas in the past. But that's not the only thing. The labor-intensive loss-assessment will be more straightforward and accurate, the associated costs lower. This allows to apply insurance more broadly.
This innovation will help to solve key problems associated with crop insurance
Historical data and experiences in crop insurance hardly exist for growth markets, which causes entry barriers. Crop insurance is still something of a rarity on these markets, although the agricultural sector is a comparatively significant one in these countries. "Risk recording and assessment in this sector is difficult, because potential yields and the associated insurance benefits constantly change throughout a growth cycle", explains Thomas Heintz. "Damage caused by natural catastrophes, for example, is difficult to measure if it is not possible to clearly determine what a field's potential yield was immediately prior to the event. In developing countries, this is even more difficult than on developed markets."
As an economic sector and basic needs provider, the agricultural industry needs insurance to protect it in the event of production losses just as every other sector does. But crop insurance is cost intensive. The geographical diversification of agricultural production results in high business management and administrative costs. This is why in many countries, agricultural insurance is only possible with the help of state subsidies.
We all have an interest in stabilizing this sector of the economy, because the agricultural industry does, after all, meet the demand for food products, one of society's basic needs. "Global developments such as population growth and the generation of biofuels mean that agricultural yield is in greater demand, but is also at more of a risk due to climate change”, explains Clemens von Weichs.
The Agriculture department of Allianz Re based in Zürich offers more than just reinsurance for agricultural insurance products. The team is the Allianz Group competence centre for this area and provides subsidiaries across the globe with advice on matters relating to product development, market entry and underwriting. "This is why the innovative product that we can offer with the help of the Sarmap software is a truly groundbreaking new development in this sector", emphasizes Thomas Heintz. "This technology means that we can help the primary insurers to overcome market entry barriers and offer agricultural insurance at competitive prices.“
Thomas Heintz, Head of Agriculture at Allianz Re
As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer. Link to the disclaimer