Crop Reinsurance: Providing Comprehensive Coverage to Farmers Using Machine Learning and AI-based Tools

Agriculture is a primary source of occupation and employment in many developing countries. Farming activities are still dependent on traditional labor and irrigation resources in these countries. In such a scenario, offering farmers and cultivators a protection plan and means of subsistence becomes important. Crop reinsurance acts as a viable option in these situations as it provides comprehensive coverage, not just to farmers but also to the insurance companies dealing in this field. 

Growing need for crop reinsurance in developing countries 

One major problem faced by the agriculture sector is that it is overdependent on natural phenomena such as rainfall, ambient temperature, sunlight, and others. This makes farming activities vulnerable to a lot of disasters and catastrophes like floods, landslides, and droughts. Hence, many insurance companies that generally cover all other types of accidents in other sectors and industries are hesitant to launch schemes for farmers and cultivators. However, governments in developing countries where agriculture is a prominent economic sector find it necessary to offer protection to such planters and harvesters. 

Crop reinsurance forms a bridge between farmers and insurance companies, thereby offering a perfect solution to the above-mentioned dilemma. These additional coverage services are purchased by regular guarantors to dilute their risk exposure in farming activities. Eventually, this helps farmers get credible and comprehensive protection for a wide range of natural disasters, catastrophic weather events, and adverse climatic conditions. Over the years, the crop reinsurance industry has grown considerably owing to its growing popularity in developing countries. Allied Market Research has published a report that states that the landscape is expected to gather at a CAGR of 7% from 2024 to 2032. 

AI, ML, and remote sensing for comprehensive crop reinsurance policies 

Cultivators in many countries have little awareness of the advantages of such schemes, while the concept of agriculture or farming reinsurance has gained momentum. Furthermore, agriculturalists are unwilling to opt for crop insurance as the risk assessment made by companies while reimbursing the losses is not accurate. Hence, many financial institutions have started adopting smart innovations and advanced technologies to improve the quality of their operations and widen their customer base. 

In July 2023, for instance, Agi3 Risk Services (ARS), a crop insurance solutions provider, announced a partnership with Definity Financial Corporation, a leading financial corporation, to launch AgriEnhance. An AI-powered crop insurance platform, AgriEnhance uses ML algorithms, along with data analytics, for precise assessment of risks and field-level opportunities such as yield potential while offering policies to the farmer. Lysa Porth, ARS CEO, anticipated the advanced platform to completely transform the crop protection regime in several developed and developing countries and help in providing financial stability to the farmers. 

At present, several research papers and studies published by different reputed institutes and universities have shown that advanced technologies such as ML, AI, and remote sensing can aid in framing insurance policies that are fair to companies as well as agriculturalists. Satellite monitoring using remote sensing capabilities, for instance, enables insurers to measure the field area accurately for the calculation of financial compensation. AI-based tools and ML algorithms using predictive analysis techniques can assist in forecasting adverse events based on the weather patterns, location of the field, and cropping season. Similarly, the use of data analysis techniques by many firms has helped them in reducing the paperwork associated with insurance policies, thereby ensuring quick processing of reimbursement claims. 

Short Description: Crop reinsurance refers to a financial arrangement wherein insurers transfer a part of the risks associated with agriculture insurance policies to companies dealing in reinsurance. In recent times, reinsurance firms have started using advanced technologies such as AI, ML, and remote sensing to improve the quality of risk assessment and offer comprehensive coverage to farmers. 

  

✍ **𝑨𝒓𝒕𝒊𝒄𝒍𝒆 𝒘𝒓𝒊𝒕𝒆𝒓: Akhilesh Prabhugaonkar 

 

Author Bio: 

Akhilesh Prabhugaonkar holds a bachelor’s degree in Electronics Engineering from the reputed Vishwakarma Institute of Technology. He has a special interest in forensics, world history, international relations and foreign policy, sports, agriculture, astronomy, security, and oceanography. An ardent bibliophile and melophile, Akhilesh loves to write on topics of interest and various other societal issues. His love for writing made him enter the professional world of content writing and pursue his career in this direction.