Grupo Los Grobo, an agribusiness company in Latin America, has been working closely with Brazilian reinsurer Austral Re to create innovative crop insurance solutions. Intelligent Insurer finds out more.
Insurers in Brazil face a number of challenges in creating products to provide effective cover for agricultural lines. Tailoring crop insurance to address the diverse needs of local farmers is particularly difficult. Companies looking to provide such cover face three main hurdles, according to Otavio Assad Negrelli, controller at Grupo Los Grobo.
One of these risks relates to the price of the crops, and the variations in market prices for agricultural commodities. Another is the cost of actually producing the crops. But these two risks are, to a certain extent, controllable by the farmers and their insurers, according to Negrelli.
“The challenge of managing price risk doesn’t present any kind of problem, because the industry already has a good risk management structure in place to manage the price of commodities,” he says.
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Latin America, Insurance, Reinsurance, Emerging markets