New frontiers in agricultural insurance
With an estimated global insurance premium of USD 31bn in 2014 and annual average growth rates of 20%, agriculture insurance has grown four-fold since 2005 and is, in many countries, the largest speciality line in terms of premium volume. The main growth has come from North America with the introduction of revenue-based crop insurance and, more recently, from emerging markets such as China, India and Brazil, driven by rapidly increasing insurance penetration. Agriculture is seen as a diversifying risk to other insurance lines of business and is attracting more and more reinsurance capacity, collateralised reinsurance and side cars. The occurrence of devastating droughts and floods and eradication of livestock populations following disease outbreaks have brought agriculture risk management to the attention of actuaries, catastrophe risk managers and accumulation controllers. While similar to property risks in terms of exposure to natural disasters, agriculture needs a specific approach to risk management approach and risk modelling to assess large loss events.