A new crop of insurance assessors
● After successfully running its first agriculture insurance assessor training programme, Land Bank Insurance Company is aiming to transform the agricultural insurance profession and grow it beyond its value of R3bn.
MD Pascal Siphugu told Business Times the programme begins again in June and aims to develop a selected group of young black farmers into fully fledged agriculture and crop insurance assessors.
“The majority of the assessors who manage our processes are previously advantaged, and we say we must make a contribution to train black farmers to help Land Bank and help the industry create black assessors of crop damage,” he said.
He said assessors were a critical part of the agricultural sector, assessing the nature of a land insurance claim to help determine the amount of compensation due to the insured party. Hail and frost damage are among the natural occurrences covered.
“The black assessors’ programme is our contribution to an inclusive agriculture sector. It supports transformation in agriculture and brings the previously disadvantaged into the mainstream. Insurance assessments are a crucial part of what we insurers do when claims are made,” Siphugu said.
Black assessors can start earning a portion of the amounts they assess as soon as they complete the programme and Siphugu encourages more black farmers to participate in the programme.
“We are calling on black farmers, particularly young black farmers and women in agriculture, to go through an induction programme. They can expect a programme with three components,” he said.
“One is classroom training, where they are introduced to the art and science of assessment. There will also be field-based work, where they go out with agricultural insurers and assessors to get experience. Once the academic and practical part has been completed, they will be ready to work on their own.”
Crop insurance remains “a very isolated sector”, but the training programme offered is an opportunity to transform agriculture and grow the crop insurance sector by formalising development agriculture, that predominates rural areas.
“The commercial sector in South Africa is worth in excess of R3bn and is growing. But the bulk of that is commercial farmers. There is an opportunity for black assessors to learn about commercial agriculture and what insurance companies look for when they assess a claim,” Siphugu said.
“Internationally, we know that in the past year, in excess of $600m (about R11bn) in premiums were sold in the past year. Those are staggering numbers. If you consider that each claim needs to be assessed, it speaks to the treasure that is there.”
Moreover, South Africa is a waterstressed country, prone to drought and flooding.
As reported in Business Times last month, the recent El Niño weather phenomenon’s effects are expected to weigh heavily on oilseed producers, putting pressure on their export targets.
“Given that black farmers make up, on average, about 10% of the commercial produce, it is plausible that transformation figures in [subsectors of the agriculture sector] are also fairly low,” agricultural business economist Wandile Sihlobo said.
FNB Commercial senior agriculture economist Paul Makube said that increasing risks in terms of production, prices and markets, have made agriculture insurance essential for farming.
“These increased risks have also raised the cost of agriculture insurance considerably, as the frequency of claims has been elevated. This has become a barrier to access, especially for smaller farmers.”
Makube added that growth in the sector would be determined by access and affordability, as well as the availability of reliable and efficient services for farmers.
“Building capacity in terms of increasing the pool of expertise will ensure farmers’ decision-making is enhanced when it comes to their choosing insurance solutions that meet their requirements,” he said.
The agriculture sector is under pressure as a result of El Niño, with total output contracting by 9.7% quarter on quarter in the fourth quarter of 2023.
Overall, agriculture’s gross value added plummeted 12.2% year on year in 2024, Makube said.
“While in times like these insurance becomes critical, affordability can be an impediment, and consequently [this means] tough times for the agricultural insurance [sector] as well. You need a good pool of farmers to take up insurance, especially for dryland crops.”
Siphugu said the first Land Bank insurance assessors’ programme last year had 20 students, 16 of whom have graduated and are now using their new skills to develop rural agriculture and assist farmers in their communities.