Overcoming Distribution Challenges in Agri-Insurance

Tony from COVER Magazine conducts an interview with Pascal Siphugu, the Managing Director of LandBank Insurance, during the AIE conference in Sun City. Pascal provides insight into LandBank Insurance's role as a key player in the agricultural insurance sector, focusing on crop insurance. He explains that the company’s social mandate is to foster an inclusive agricultural sector, supporting both large commercial farms and smaller, development-oriented farmers. While LandBank Insurance has made substantial progress in the commercial segment, holding a 37% market share, Pascal emphasises their commitment to expanding support for small-scale farmers.

Pascal discusses the challenges faced by small-scale farmers, such as affordability and distribution. To overcome these hurdles, LandBank Insurance is working on creating bespoke, affordable insurance products, like index insurance, which are tailored to the needs of smaller farmers. This involves training black brokers and collaborating with commodity bodies and government departments to improve distribution.

Furthermore, Pascal highlights ongoing discussions with the national treasury and the department of agriculture to secure subsidies for index insurance products, aiming to enhance accessibility for small-scale farmers. He also mentions the support from reinsurers and the Land Bank’s initiatives to combine grants and loans for farmers. Pascal expresses optimism about learning from successful index insurance models in countries like Kenya and Zambia, where similar programs have achieved significant growth. The interview underscores LandBank Insurance’s dedication to improving agricultural sustainability and food security in South Africa by addressing both the economic and logistical challenges faced by farmers.

Takeaways

1. Focus on Agricultural Insurance: LandBank Insurance specialises in crop insurance, aiming to support a wide range of farmers, including both large commercial and small-scale farmers.

2. Social Mandate: The company has a social mandate to drive inclusivity in the agricultural sector, working to make insurance accessible to all farmer segments.

3. Challenges for Small-Scale Farmers: Small-scale farmers face affordability and distribution challenges. LandBank Insurance is developing affordable, bespoke insurance products like index insurance to address these issues.

4. Training and Distribution: The company is training black brokers and partnering with commodity bodies and government departments to improve the reach and effectiveness of insurance distribution.

5. Government and Reinsurer Support: LandBank Insurance is engaging with government bodies for potential subsidies and leveraging support from reinsurers for product development, pricing, and distribution expertise.

6. Learning from Other Countries: LandBank Insurance is studying successful index insurance models from countries like Kenya and Zambia to inform their own strategies.

7. Government Funding: The Land Bank, supported by the Department of Agriculture, provides a mix of grants and loans to farmers, with a portion allocated for insurance, helping to mitigate risk and support the agricultural sector.

8. Long-Term Goals: The company’s objective is to enhance agricultural sustainability and food security in South Africa by improving insurance access for small-scale farmers and overcoming logistical and financial barriers.