India is the world's leading agricultural producer and around 58 per cent of its citizens derive their primary source of income from farming, according to IBEF. In fact, whether it is a developed or underdeveloped country, the agricultural sector has always been at the centre of every economic debate worldwide.
Several organisations and the government have taken extraordinary measures to disrupt traditional agricultural practices with automated technologies and machinery. They have also identified a significant opportunity for the insurance sector to develop products that protect farmers' best interests in terms of crops, farms, and family members.
Furthermore, the country has been hit by a number of shocks in recent years, including earthquakes, pollution, drought, and the Covid-19 pandemic. These have practically impacted every business sector. In this context, it becomes a dire need to educate, increase awareness, and take preventative measures such as insurance, to reduce the damage , particularly farmers, experiences. As a result, the insurance sector has become a requirement in every field, including agriculture, in order to limit the level of risk.
Importance of Insurance Segment
The world we live in is indisputably filled with uncertainty and risks. People, families, businesses, buildings, and assets are all vulnerable to various types and levels of trouble, such as losing one's life, health, investments, or property, among other things. While it is not always possible to prevent unpleasant situations, with the assistance of the insurance sector, it is now possible for the firm to grow sustainably. Insurances not only assist businesses in risk mitigation but also provide them with financial resources in the event of a loss. As a result, the insurance industry has become an essential aspect of ensuring enterprises' well-being and economic growth in various ways, including safeguarding companies' financial health and boosting domestic production and trade.
Technological Disruption in the Agriculture Industry
There is no denying the fact that digital transformation affects not only the aspects of life but also corporate procedures. And no one can deny the better degree of ease and precision that digital technology has enabled, resulting in significant changes in how firms operate. Digital transformation has improved old processes and opened up new business opportunities, and the insurance industry is no different. As a result, technology is disrupting the insurance segment in the agriculture industry in several ways, which are listed below.
Artificial Intelligence: The rise of AI has changed several industries, including insurance. With the help of AI, insurers can create a sophisticated environment in which information flows effortlessly from one department to the next, thereby speeding up the policy purchase process and requiring less manual input from both parties, the customer and the insurer. It also allows for good consumer communication. Furthermore, insurers deploy AI-powered bots to connect with customers in real-time.
Data Analytics: The use of technology is the finest gateway for businesses across sectors to increase convenience and minimize risk concerns. Big data analytics is changing how insurers assess risk and price policies in this context. Insurers can better understand the risks involved with insuring specific crops and regions by examining data from different sources, such as weather patterns, soil conditions, and historical crop yields. Furthermore, technological advancements are boosting communication between insurers and farmers, enabling real-time reports on crop yields and weather conditions.
Internet of Things (IoT): Internet of Things (IoT) applications in agriculture aim to meet rising demand while reducing output losses. Robots, drones, remote sensors, and computer imagery, along with ever-improving machine learning and analytical tools, are used in agriculture to monitor crops, survey and map fields, and provide data to farmers for sensible farm management strategies to save time and money. IoT adoption is widespread because it decreases human error and claims while decreasing insurance loss rates. Furthermore, IoT boosts coverage amount (invoice value) by reducing reinsurance underwriting, improving underwriting productivity, and increasing provider awareness.
Insurance Segment: A Safety Net for Agri-Sector
In today's highly competitive marketplace, where everything is changing at breakneck speed, the insurance industry is providing a safety net for agriculture sectors. Technology such as AI, IoT, data analytics, and so on are assisting the agriculture industry in making insurance more accessible, affordable, and efficient. As a result, by harnessing these technologies, insurers can better control risk, decrease costs, and provide more personalised goods and services to their clients.
Shailendra Tewari is the CTO at Gramcover.
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