One insurance provider is creating individualized risk profiles for farms, a process the company calls “precision insurance.”
“Our goal with that tagline is to say you’re not average, so your insurance company should treat you that way,” said Kyle Gibson, AGI3’s lead broker and managing director of operations.
Why it matters: The agriculture industry is looking for robust business risk management programs as farmers are told to prepare for more volatile weather in the future.
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Gibson, who staffed the AGI3 booth at the Ag in Motion farm show July 17, said many insurance programs treat customers as an aggregate rather than an individual. That has potential to see one farmer subsidizing their neighbour.
“There’s a big gap in the market in terms of data collection and using that for risk management and pricing. So, working very closely with growers, we take a ton of information and we try to price risk better.”
The resulting insurance product can create different profiles within a single farm.
“When we sit with a farmer, we individualize that pricing at the quarter-section level,” said Gibson. “So, for a larger farm, if you had canola in the south of your farm and canola in the north of the farm, they could potentially be differently priced.”
That means no two farmers pay the same price, and even an individual farmer’s price can vary depending on where they plant their crops.
AGI3 has mapped every legal land description (LLD) across Western Canada. Producers can go into the software and upload shape files, or connect to a third-party app like the John Deere Operation Centre.
“Then we intersect those LLDs, and we intersect all the pricing together,” said Gibson. “It does get pretty detailed.”
Growing foothold
AGI3 is in its second year and has policies across all three Prairie provinces. Its flagship product is called AgriEnhance, a customizable, yield-based plan that allows farmers to choose individual crop or whole farm coverage.
A number of other products are on the horizon, the company said. One of those is a grain contract insurance option called ForwardProtect.
“The basic idea is that if you can’t meet your commitments, we pay your bio-penalties,” said Gibson. “We’re working with one of our large grain buyer partners on this one.”
It also has a hail protection product lined up that may provide a speedier process from claim to payout.
“Instead of waiting three weeks for somebody to come out to see the damage, we have weather radar built in, and we have more weather analytics coming.”
Instead of guessing whether hail occurred, the company can see the big weather cell that likely produced hail.
“It’s pretty clear,” said Gibson. “There’s an image of what happened to the crop and we can get the claim done as fast as possible, so the farmer gets the money as fast as possible.”
Although it is not a farm management company, the insurance application includes farm management data.
“As we go forward, we have a thing called a farm assurance program coming. Some of that is tailored around farm management practices, potential sustainability metrics, equipment information. And that would build a score, and that would be used towards discounts,” said Gibson.
“We never charge more, but we have the ability to maybe offer discounts based on some practices.”
Gibson doesn’t see his company as a replacement for all crop insurance, but it could be used in tandem with government risk management solutions.
“Some farmers just need more coverage based on expenses, so we use that as a top-up,” he said. “Other farmers like to drop some of their crop insurance a little bit. Maybe they take 60 per cent and use us at the top end.
“They still have a full tower of risk. They’re fully covered. But with us at the top end, you get a few benefits.”
