Agriculture

With over 125 million inhabitants, Guangdong is the most highly populated province in China and boasts its highest GDP. Located in the south of the country, it is heavily exposed to excess rainfall and typhoons. In the face of growing climate perils and increasing urbanisation, the province is seeking to reinforce food security. With this in mind, the government aims to triple agricultural insurance penetration from 0.43% in early 2020 to 1.2% in 2022. A stable income for farmers less impacted by weather hazards would encourage rural revitalisation, agricultural modernisation and ultimately narrow the wealth gap between urban and rural populations.

Guangdong cultivates a large variety of local agricultural products. Unlike other provinces, it has limited cereal crops, while aquaculture, vegetables and fruits are dominant. Underwriting such crops is technically challenging due to a lack of data and expertise. For this reason, there is a strong demand for insurance product innovation.

Our Agriculture Insurance Risk Monitoring Platform (AIRMP) provides product design, actuarial analysis, payout calculations and product management. Our platform enables local insurers, including the leading primary insurer in Guangdong, to leverage big data and machine learning. As of the end of 2021, approximately 20 insurance products have been developed via this platform, covering various species and multiple perils – such as typhoons, extreme temperatures, strong winds and droughts. Finally, Swiss Re also provides reinsurance capacity for products developed via the platform, further helping to close the protection gap and drive the development of high-quality agricultural insurance in Guangdong.

More than six million farmers in West Bengal, India, can now look forward to having better coverage for their crops after the state launched its first fully subsidised technology-driven crop insurance scheme. Since the product is fully subsidised, it is free for the farmers. This, in turn drives high penetration among the farming community and throughout the state. It is estimated that around 85% of the 7.2 million farmers within West Bengal are insured through the scheme. Their insured crops are primarily rice paddies, but also include potatoes, mustard, wheat, lentils and sesame.

The Bangla Shasya Bima scheme is unique in that it uses the Crop Health Factor as the underlying parameter: it uses remote sensing technology to measure and combine various indicators such as vegetation and rain to assess the health of the crop. While most states in India continue to rely on manual data gathering in area yield index models, which have been running since the 1970s, the Crop Health Factor-based insurance signals a paradigm shift in the efficiency of crop insurance models. The National Remote Sensing Centre (NRSC) within India’s Department of Space will compute the Crop Health Factor parameters.

The scheme was co-developed by the state government of West Bengal, the NSRC, and the Agriculture Insurance Company of India (AICI). Swiss Re helped review the product design and is also the lead reinsurer of the scheme. As part of the product development journey, Swiss Re and AICI have paved the way for the replication of similar successes to close the protection gap in the Indian crop insurance sector. Such strategic collaborations support our ambition to develop affordable, technology-based innovative products in agriculture and other associated sectors.