Insurer King Price is piloting a “pay-as-you-farm” agricultural insurance product that bases farmers’ premiums on the actual usage of equipment and machinery – like tractors, harvesters, mobile irrigation systems, and balers – rather than a fixed premium.
The new product is based on King Price’s new pay-as-you-go car insurance product, chilli, which was launched during lockdown as a response to clients who were driving less.
The product’s pricing model will be enabled by the insurer’s use of telematics technology – or the Internet of Things – which allows it to accurately record the movements and time in use of the insured equipment and machinery, says Kobus Stapelberg, King Price’s commercial and agriculture partner.
“Farmers generally want two things from their insurance: flexible products, that allow them to tailor their cover to their specific needs and to change their policies quickly and easily; and personal relationships,” he says.
“What happens currently is that farmers and brokers will put their equipment on limited cover during the off-season, and change it back to comprehensive cover during the relevant season. If they forget to change the cover, they are at increased risk of losses. What we’re working on is providing comprehensive cover throughout the year, but changing premiums according to actual usage.”
The new product highlights King Price’s entry into the agri space. Since entering the sector last year under industry veteran Stapelberg, the insurer has used technology and data analytics to offer innovative products. This allows the company to be agile and make the quick changes that farmers need. It will also allow it to add innovative products, like incorporating drone technology for farm security and animal management, in the future.
It is currently the only insurer in the country to offer theft cover for livestock, dependent on the farmer’s ability to maintain rigorous herd management practices.
“We did months of research into the market and saw that the available agriculture insurance products don’t really meet the needs of modern farmers,” says Stapelberg. “Farmers don’t want to pay a flat rate for equipment and machinery that sits idle in a shed for 6 or 9 months of the year. Telematics is already widely used in the transport industry, and farming offers an obvious use case to be innovative.”