Agricultural Risk Transfer

Foreword

Agriculture is an important industry segment of the global economy in terms of GDP contribution and employment, particularly in many low- and middle-income countries. At a time when population growth drives further demand for food and agricultural raw materials, and the producing sector faces supply challenges and uncertainties from potentially more natural disasters related to climate change, risk management is of ever-growing importance. As experienced in 2007/2008, and to a lesser extent in 2010, production shortfalls in key exporting countries cause immediate responses on global commodity markets and trigger food security crises for many net importers.

The agricultural insurance sector has been adapting to the increasing need for risk transfer and reached a premium volume of close to US$31 billion in 2017 – a threefold increase since 2006. While the large growth in our business allows for a better geographical diversification for global reinsurers and capital markets, it means at the same time higher exposure for specialised local insurers.

Agricultural Risk Transfer comes at the right time, when our industry is optimising covers in well-established markets and expanding in new territories where insurance penetration is low, demand is increasing but product development is challenging and requires high level of expertise. Underwriting agricultural risks has and will continue to be highly complex. Pure actuarial risk pricing methods that rely on limited historical ...