What are the critical issues that keep farmers awake at night? Production costs? Theft? Safety? Lack of electricity? The climate?
South Africa’s agricultural sector is big, important, and diverse. It is also exposed to a wide range of risks, bringing many opportunities to the insurance industry. But when you insure a farmer, you need to understand where they are exposed and play your expert role to mitigate those risks.
These were some of the insights shared by Hollard Head of Agri Andries Wiese as he examined the insurance perspective within the agricultural sector at a recent Education Webinar hosted by the Insurance Institute of the Western Cape and sponsored by our Regional office, headed by Mark Molenaar in the Western Cape.
Wiese gave a succinct overview of the demographics of the agricultural sector nationally, as well as that of the Western Cape, drawing on an annual survey by Market Surveys & Statistical Analysis (MSSA), an organisation that does countrywide research with commercial farmers.
Farmers in different parts of the country have vastly different needs. In the Western Cape, 26.7% of commercial farmers regard fruit and vegetable farming as their primary income, with winter crops (22.7%) and vineyards (21%) in second and third place, respectively. In South Africa as a whole, stock farming tops the list at 25.7%, with summer crops in second place, followed by fruit and vegetables.
Contrary to the stereotypical picture of a farmer as a possibly unsophisticated, “scary” client “wearing vellies”, said Wiese, the MSSA survey showed that most farmers have a tertiary qualification; the majority have smartphones and computers with internet access, and many use computers for anything from financial management and budgeting to labour management.
Wiese also looked at the use of intermediary and financial services in the sector, saying most farmers get their money through financing from banks – but scenarios are changing when it comes to their choice of banks and insurers: for farmers, it is no longer just about tried and trusted brands – “it’s about the offering that comes with the brand”.
Just over 40% of Western Cape farmers (and 34.7% countrywide) are sole owners of their farms, but private and public companies, trusts and other entities come into play, too. All these factors are important to understand when it comes to tailoring insurance.
Farmers do their research online, but they do not buy short-term or life insurance online, still preferring to deal with independent brokers, bringing great opportunities to the industry, said Wiese. No two farmers farm in the same way, he added.
“They have different risks. Sit with them, understand their business. You need to differentiate. If you add and create value and give appropriate advice, this is a sector you can be successful in.”
Whether it’s the niche area of crop insurance – an issue that brings much stress and concern to the farming community – or cover for the spread of fire and water bombing, and farmers’ responsibilities when it comes to the National Veld and Forest Fire Act, brokers need to understand exactly what they’re dealing with.
“You have to understand your market segment and specialise,” said Wiese. “This area allows you the opportunity to really ground yourself and to support a sector that makes a difference, but it is also an incredible business opportunity.
“Be the insurer of choice for your client by giving the right advice and understanding their business … You have to get out, get your boots dirty, and it’s a sector that will give back immensely if your client trusts you.”