Santam stands firmly behind the agriculture sector
This year the crop insurance business has been adversely impacted by hail damage to summer crops in the Eastern region of South Africa, and saw drought insurance claims in the Central and Western regions. Floods in Limpopo also had an adverse impact on insurers.
Some farmers are also still recovering from losses caused by the devastating natural disasters of 2012, with the year going down in records as one of the worst years for catastrophes in South Africa.
"We are the oldest insurer of the sector with 83 years of support to this class of business and have consequently gained deep experience in dealing with the highs and lows of agriculture. The fact is that the agriculture sector is of utmost importance to the country. It needs insurance partners to ensure its sustainability and to contribute to national food security, especially with South African commercial farmers being placed in the precarious position of having to produce more food with less arable land at their disposal," says Gerhard Diedericks, newly appointed Head of Santam Agriculture.
In addition, Santam believes that despite Munich Re's withdrawal, there is still adequate reinsurance capacity.
Diedericks adds, "Crop insurance is part of the Santam service offering and we are going to continue to do it strategically and selectively. It has in the past proven to be profitable for the company, and we see opportunities for profitable growth in the future."
"At Santam we target a certain balance between multi-peril crop insurance (MPCI) and hail. We believe this mix works well and will govern our approach to how we continue writing business into the future. Sound underwriting is key to insuring the agriculture sector sustainably. We will also continue to invest in research, people and processes to ensure we manage claims accurately" says Diedericks.
"We understand the financial pressures farmers face and the next few years will be critical for the agricultural sector to adapt to its various challenges. It is going to be important for farmers and the agriculture community as a whole, including insurers, to reassess and develop risk management in the sector," says John Melville, Executive Head of Risk Services at Santam.
According to Melville, weather-related changes will increasingly emerge as a challenge in future. Inevitably this will impact the pricing and terms on which cover can be provided.; However, the extent of such impact will be significantly determined by farmers' response to adapting to and mitigating their risks and exposures.
"We have long ago made the decision to be there when our clients need us most. Our farmers need to know their insurance partners are committed to them, and we are, both in terms of settling claims, and working with them to help manage their risks" says Melville.