To understand the impact of COVID-19 on agriculture insurance operations, GIIF conducted a survey with 11 of its implementing partners in Sub-Saharan Africa and Asia.

Due to the pandemic, the general feedback on policy renewal and new business generation for the agriculture business line offers a concerning outlook. Many expect a decrease in farmer enrollment due to diminishing disposable income and travel restrictions affecting field visits and in-person product awareness workshops. Likewise, limited mobility for project monitoring teams, crop cut specialists and aggregators as well as delays in new project/product launches were reported by insurers across West-Eastern and Southern Africa (from Mozambique to Nigeria and Zambia). While the financial impact of COVID-19 has not been fully materialized at this point, a potential decrease in income across business lines is foreseeable in many countries. Furthermore, where there is provisions for fiscal support, potential delays in premium subsidy payment can be expected since governments’ priorities have shifted to pandemic crisis relief.

Despite the difficulties, most insurers shared that they would retain an appetite for agriculture insurance. Several multi-line insurers even indicated an increasing risk appetite for this line of business to diversify their portfolio mix - currently concentrated on property, auto and travel insurance - by increasing coverage to more farmers in more diverse geographical regions. Nevertheless, 2020 could be a defining year for insurers in the development stage. One insurer is gauging impact from COVID-19 on its pilot projects to infer their middle-term operational viability in the country.  

On the bright side, during this time, digital or insurtech solutions are valued as viable means to minimize negative impact on insurers’ operations. Some utilize online meetings to coordinate work with business partners, while others switch to radios, SMS and social networks for promotional and sales activities. More experienced insurers, often subsidiaries of international companies, have been leveraging insurtech platforms and plan to further advance their digital strategies in terms of digitally enabled products incorporating remote sensing, online enrollment, mobile payment as well as automated internal process. The same insurers, usually along with their parent company, have institutionalized business continuity management or crisis management plan ranging from alternative work arrangement, teleconferencing to strategically digitalized processes. For instance, in India, GIIF has invested additional funding to support the implementation of selected innovations from 2019 Agriculture Insurtech Challenge to improve its national insurance scheme – PMFBY. The follow-up activities, however, have been delayed with lockdown and national elections in the country. In response to the client request, GIIF has also commenced assistance in building the digital infrastructure of the national agriculture insurance companies in Senegal and in Sri Lanka to operationalize digital insurance.

In sum, although the initial overall feedback of COVID-19 shows unexpected burden that is affecting the profitability of insurers, it could also present an opportunity to embark on a more committed journey of digitalization to upgrade delivery models and continue engaging with rural clients and business partners while improving their internal crisis management systems. To be sustainable, operational resilience from such large-scale business interruption would be the next frontier for insurers in the nascent market as they accumulate underwriting and technical capacities to serve the diverse needs of farmers.