Affinity Insurance and Better Agreements Between Farmers and Partners

Farmer working on the field insured by Affinity insurance

By selling some vitally necessary insurance to your suppliers, you enhance the potential financial resilience of such farmers. Moreover, by using innovative insurance and risk management solutions, we can prevent the risks or deal better with the consequences of loss.

Improved relationships, sustainability and financial resilience between actors in the supply chain

Input producers and suppliers (chemicals, fertilizers, seeds) and food manufacturers have relations with many suppliers and buyers. Most of their success depends on how much buyers can buy or how much suppliers can supply at a competitive price.
It is increasingly important for such industries to find new access points to farmers, diversify their revenues, facilitate the supply of more crops and livestock raw materials, and develop and retain crucial buyers and suppliers.
Many external factors, including catastrophic weather events or epizootic diseases (drought, bird flu, African swine fever), could lead to individual or even massive breach of contract obligations by farmers, resulting in financial losses.

Partnership through affinity insurance

Affinity insurance and risk management services will help you strengthen your relations with counterparties and make such interaction less risky and beneficial for both parties. 

Affinity is insurance solutions distributed via third-party providers who are not insurance distribution specialists. An affinity program brings multiple benefits for any enterprise requiring food manufacturing or agricultural inputs supply.

Since the pooling of insurance enquiries into one affinity channel creates risk diversification and impressive business volume for the insurance company, leading to additional substantial discounts or more extended coverage. In other words, a farmer will buy better insurance from you compared to buying individually and directly from an insurer. Moreover, an insurance policy can be fully granted to some key customers.

Examples of such solutions are:

  • Poultry breeder gets a discount on poultry insurance, whereby large procurement is done by poultry processors, whom they supply.
  • An inputs producers finance 30% of subsidized crop insurance policy for areas with implemented bought inputs. An insurance policy for such an area is free for a farmer.
  • Additional parametric coverage is provided in the agricultural machinery policy, compensating added fuel and spare parts expenses caused by wet weather.

Insurance products can be embedded into the main product and free for a farmer or at a substantial discount, as it will be fully or partly sponsored by your company. It will help differentiate you in the market and incline a farmer to buy more main products. Moreover, cross-sales of insurance policies is one more point of communication of your sales staff with potential and existing clients.

Examples of such solutions are:

  • A farmer buys a new tractor and gets a tyres insurance policy for free;
  • A farmer who buys chemicals exceeding a specific amount gets a parametric drought policy for free;
  • Income warranty parametric policy for solar farms deployed on farmers’ fields.

Some crops are difficult to grow to achieve the required quality or quantity (e.g. starch potatoes, rapeseed, malting barley). By having a good policy sold or sponsored by crops or animal buyers, a farmer is more confident and motivated to grow a higher amount of such crops/animals for further processing.

By selling some vitally necessary insurance to your suppliers, you enhance the potential financial resilience of such farmers. Moreover, by using innovative insurance and risk management solutions, we can prevent the risks or deal better with the consequences of loss.

For example:

  • The crop yield insurance payout compensates the farmer for the seed price in a bad weather year. If the farmer owes money, the debt can be restructured at a later date so as not to lose liquidity.
  • Crop and livestock biosecurity monitoring to identify the cause of potential future losses in advance and make recommendations to your partners on how to minimise risk.
  • IT solutions analyse the various financial and production data of buyers or suppliers in agriculture. This helps assess the risk of reliability and lack of supply or repayment of debts.

Using innovative insurance solutions and IT tools helps achieve maximum results from selling insurance policies to policy sales to farmer customers.

This article is a part of our Foodprint publication focusing on issues and risks facing the Food & Agriculture industry. Read the publication and learn more about insurance solutions and the growing importance of risk management and alternative solutions like parametric insurance.

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Alma Ribanovic

Group Practice Leader Affinity

T: +43 50404 180

Neobanks – Potential for Embedded Insurance

Neobanks are trying to bridge the gap between the offerings of traditional banks and the expectations of customers in this digital era.

What does traditional banking bring to customers? Complex processes, problems with ATMs and load of papers for account opening and loan approval. On the other side, neobanks with their business model are trying to fight these stereotypes by offering digital banking platforms with end-2-end services, no or low fees and excellent customer experience.

Neobanks are trying to bridge the gap between the offerings of traditional banks and the expectations of customers in this digital era.

What is a Neobank?

Neobanks, which are sometimes referred to as “challenger banks” are financial institutions that have positioned themselves as the cheaper alternative in comparison to traditional ones. They are fintech companies offering different technological solutions (like apps or software) to modernise mobile and online banking. In most cases they are focused on specific financial products (e.g. loans, accounts, savings) leveraging technology and artificial intelligence to offer tailor made services to the customer while, at the same time, minimising operating costs.

Neobanks vs Traditional Banks

Neobanks are still on the rise, but it would be hard to expect them to have many advantages over the traditional banks. Traditional banks have two very crucial advantages – money sources and the trust of their customers. Still, their complex legacy systems are the major burden they are carrying and for them it will be difficult to adapt to the digital needs of the technologically oriented generation.

On the other hand, neobanks might not be “equipped” with money sources like traditional banks, but they can fight in other areas – field of innovation – allowing them to act faster to the demanding needs of the customer by introducing innovative products fast and easy and offering excellent customer service.

Popular Neobanks

With more than 12 million users, Chime is the most recognised brand in the neobank space in the U.S. The platform eliminates many of the common fees typically associated with traditional banks and provides credit-building opportunities, early access to direct deposit payments and automatic savings features with a competitive annual percentage yield.

Initially founded as neobank in 2020, Varo Bank was changed to a bank. It offers services like Chime, including no monthly or overdraft fees and no minimum balance requirement. Users don’t need to undergo a credit check to open an account.

Current has also attracted hundreds of thousands of customers in the U.S. It offers benefits such as early access to direct deposit, fee-free overdrafts and cash back on debit card purchases.

Embedded Insurance for Neobanks

Working in the environment that is very competitive, like FinTech is, makes offering embedded insurance the best way to catch the interest of the customer. Insurance not only helps bringing trust in the mobile banking app by protecting customers purchases but increases the expenses of the customer and, ultimately the revenue for the neobank.

Embedding insurance plays a crucial role in the customer acquisition process by creating additional value for the customer in terms of new and innovative product solutions and for the neobank in terms of enhanced and value-loaded banking products they can offer.

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Alma Ribanovic

Group Practice Leader Affinity

T: +43 50404 180

Embedded Insurance – The Name of the Game

Person buying embeded insurance

Embedded insurance is the future. It creates win-win-win situation for all parties involved.

What is one of the biggest issues we face in the insurance industry nowadays? It is the fact that selling insurance, which is not purchased together with a product or service, becomes quite ineffective and inefficient. The consequence of this “separate sales” is that the insurance product is very often rejected by the customer as unappealing hassle what, at the end, results in a huge protection gap. And due to market changes in terms of digitalisation, climate changes and lack of innovation, this gap is just getting bigger.

Buying insurance online represents significant issue for majority of customers. Why? Simply because the customer journey is inadequate and complex. Most of the insurances are still sold offline. True, they are researched online, but purchase cannot be done.

How can we solve this gap?

It is about embedding the insurance into the digital service offering. It is important that insurance is offered on the spot when the need is there and the risk to the buyer is paramount. Embedded insurance bundles the insurance coverage or protection with the purchase of a core product or service. It means that the insurance is not sold separately to the customer, but it is provided as a normal feature of the core product or service. That is, the customer gets more affordable, relevant and personalised insurance when they need it most.

Various tech players present on the market are very well equipped to embed insurance into their e-platforms mostly because they are the ones who control important insurance topics like:

  • Customer Journey: As life is moving rapidly into the online sphere, tech players are the ones who can best influence and control the customer journey. They are able to meet the customer where they are, offer insurance product when they need it and, by that, increase the penetration rates of insurance sales in comparison to separate insurance purchases.
  • Data: One of the biggest assets of tech players is that they have the data about the customers browsing history, transaction history etc. Data are up to date and can be used by insurers for better underwriting, risk selection and risk monitoring.
  • Trust: Digital services enjoy high levels of customer trust due to superior customer experience they offer. This is the perfect opportunity for insurance companies, as embedded insurance can help close the trust gap between insurers and digital services.
  • Communication: Tech players are in constant contact with their customers via diverse digital channels in comparison to insurers who contact their customers mostly only on renewals. By offering embedded insurance, insurers can use these communication channels to increase the connection to their customer base.

How is the market doing it?

Ant Group manages a digital financial services platform in China with an enormous user base due to the ubiquity of Alipay and the superapp they’ve created around it. In terms of insurance they spotted a large underserved market in low-income rural areas that traditional insurers were ignoring. Rather than trying to resell existing insurance products from one or two partners, they created their own insurtech platform to connect demand with supply in a new way. Ant Group focuses on understanding the needs of its consumers, educating them about the value of insurance and then designing compelling solutions for them with its suppliers.

Its insurance partners take on most of the underwriting and regulatory risk and deliver products to Ant’s specification. The company now offers 2000 customised, affordable and flexible life and non-life products from 90 different insurance suppliers.

Uber is another big online platform with a close relationship with its users including its 3 million drivers worldwide. At any time, depending on local regulations, competitive threats and new market opportunities, Uber requires the flexibility to provide its drivers with different types of insurance, benefits and incentives, related to vehicle and personal injury cover, sickness, paternity pay or other income loss.

Some of its insurance solutions are provided to drivers for free, some are invisible, some are optional add-ons. Some are related to when the driver is ‘in service’, some not. Given the size of its driver base, it has the potential to offer more complex products like pensions, life and health insurance in the future, in addition to other financial services like the bank accounts and loans it already offers.

In all cases Uber prides itself on the simplicity of its user experience and requires insurance solutions which are easy to adopt, good value and quick to claim against.

Embedded insurance is the future. It creates win-win-win situation for all parties involved – tech players, insurers and customers enabling better protection of consumers, creating added value and strengthening the value proposition.

Related Insights

Alma Ribanovic

Group Practice Leader Affinity

T: +43 50404 180

Affinity pilot project for insurance of Ukrainian farmers

Parametric insurance solution for Corteva Agriscience

GrECo Ukraine, together with insurance partner ARX Ukraine have launched the pilot project for the Affinity parametric insurance solution for Corteva Agriscience customers.
The solution covers crops such as corn, sunflower, wheat and barley against drought as well as the possibility to monitor the insured soil moisture index through the MeteoControl platform which has become a partner and IT provider of this project.

Applying for the cover is very simple and easy by filling out an application form on the website.

In parametric insurance, a certain parameter which cannot be influenced by the agricultural producer is insured. Affinity parametric insurance refers to a solution which is distributed by an entity to the end customers, here the farmers. The GrECo Group is specializing in insurance solutions and affinity schemes for dedicated industries.

Corteva Agriscience is a publicly traded, global pure-play agriculture company that provides farmers around the world with the most complete portfolio in the industry – including a balanced and diverse mix of seed, crop protection and digital solutions focused on maximizing productivity to enhance yield and profitability. With some of the most recognized brands in agriculture and an industry-leading product and technology pipeline well positioned to drive growth, the company is committed to working with stakeholders throughout the food system as it fulfills its promise to enrich the lives of those who produce and those who consume, ensuring progress for generations to come. Corteva Agriscience became an independent public company on June 1, 2019, and was previously the Agriculture Division of DowDuPont.

The GrECo Group offers its clients individual solutions in risk and insurance management and is the leading insurance broker & consultant for corporations, associations and authorities in CESEE. The Group is an independent, family-owned company, headquartered in Vienna and employs 1.000 people in 57 offices in 16 countries.

ARX Insurance Company is part of the international Canadian insurance group Fairfax Financial Holdings, which has been successfully operating in the Ukrainian market for 25 years, 11 of which are under the AXA Insurance brand.

MeteoControl is a Ukrainian insurtech startup that helps farmers to insure unusual weather conditions using modern software solutions. With the help of Meteocontrol online platform, farmers will be able to apply for the insurance program, generate documents for signing, and track the current soil moisture level and the probability of receiving refund.

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Insurtechs as industry disruptors

Disruption in the insurance industry is seen more than in others and while for some this is an opportunity, for others it is a difficulty and threat.

Quite interesting times are ahead of insurers as new challenges are shaking the market. Insurers are faced with their outdated technology and demanding legal restrictions which require significant adaptions to be done and new business models to be developed.

Statistics show that at least 86% of insurers think their revenues are at risk from the rising technological developments – and this is best visible with the upsurge of insurtechs. The fact is that some of the traditional insurers on the market are more than 300 years old, while, on the other side, quite a few insurtechs are only 300 days old. And they are shaking the financial sector. Investments made in the insurtechs show exactly that – according to FinTech Global they have doubled between 2017 and 2018.

What is an insurtech?

Insurtech stands for insurance technology which is designed to enhance the operational efficiency and efficacy of insurance companies. One might say that the technology in the insurance industry is nothing new, and this is the case, but insurtechs bring something more.

They bring innovation in various forms of artificial intelligence, internet of things, smartphone applications, drones etc. For example, using artificial intelligence in apps had a quite significant contribution to the fast success of the insurtechs as the number of data they can produce are exactly what is needed to enhance efficiency and effectiveness.

Most prominent insurers are already active in providing customers with a mobile app to manage their insurance business. This has major benefits on both sides: saving of administrative costs for the insurer and improving customer experience with the service that is simple, fast and convenient.

“Insurance CIOs need to expand their market insight concerning the innovation and disruption potential of insurtechs. Start by identifying the areas where insurtechs could add value; then evaluate potential collaboration or investment opportunities” – Juergen Weiss, managing vice president at Gartner.

What is there for insurers to do to still remain competitive:

  • Be simple and go digital: Insurers need to digitalize their business and create simple, easy to enroll and easy to follow processes and products which will enable them to fulfill their customer promise and raise customer experience to the next level.
  • Utilize the advantage in distribution: If anybody, insurers definitely have the critical advantage: a wide variety of distribution channels – agents, brokers, financial advisers and even non-insurance professional enable insurers to reach the scale of customers insurtechs can hardly match.
  • Welcoming advanced analytic: The main advantage of insurtechs is the usage of data and advanced analytics to master insurance specific activities, like underwriting. Insurers should also rely more on the advanced analytics to modernize their operations and enhance customer experience.
  • Connecting with diverse ecosystems: Insurance companies need to develop new and innovative business models by building on existing relationships with business partners and providers.

Related Insights

Alma Ribanovic

Group Practice Leader Affinity

T: +43 50404 180

Always one step ahead: Affinity insurance for B2B2C

Traditional B2B and B2C companies are increasingly working together and are increasingly building a new B2B2C business (Business to Business to Customer). “Affinity” is the buzzword of the hour.

Business and customer relationships are changing radically. Digital, social and cloud-based developments and demanding customers are pushing for innovative sales channels. GrECo has recognized the changing signs in the market and also offers its client’s tailor-made B2B2C insurance-solutions to increase revenues, secure competitive advantages, win new customers and increase the loyalty of existing customers.

What is affinity?

Affinity insurance is the sale of insurance products by non-insurance intermediaries. The focus here is on the sale of insurance policies as a supplement to the core-product.

Affinity solutions are suitable for many potential partners, from banks to car-manufacturers, telecommunications-companies, utilities, retailers, e-commerce and various digital-players. Affinity sales has traditionally focused on selling ancillary insurance products to generate additional revenue or to differentiate themselves from the competition.

GrECo offers individual affinity insurance solutions to its clients, who act as partners here. How does this work? First, we develop a deep understanding of the respective company in order to find the most advantageous way of cooperation. In combination with a wide range of specializations and expertise, we then explore the potential for affinity insurance and ultimately develop a solution.

Affinity advantages for GrECo partners:

  • Risk-free sources of income
  • Greater involvement of sales-staff and use of sales-channels
  • Improvement of customer loyalty
  • Winning new customers
  • Creating competitive advantages
  • Potential for strategic differentiation

Affinity advantages for the customers of GrECo partner:

  • One-stop-shop for complementary products
  • Hassle-free shopping experience
  • Wide range of different affinity solutions
  • High quality products “refined” with insurance

Two selected GrECo success stories

JobRad-model with registration database fase24
Employees are offered a bicycle/e-bike to cover the daily distance between home and work. The employer provides a subsidy for the purchase of a suitable bicycle/e-bike up to an amount X. Following the expert advice, the fase24 bicycle dealer prepares a binding purchase offer with which the employee contacts his company. Once the employer’s allowance has been determined and the recipient is aware of his monthly salary deduction, the employer orders the bicycle/e-bike from the regional bicycle-dealer. The employee collects the bicycle from the dealer, where the bicycle is registered and insured.

EnergieSORGLOS with the public utility „Stadtwerke Klagenfurt“
In Klagenfurt, the customers of the municipal utilities will not have to worry about unforeseeable events when paying for their energy supply in future. Because within the scope of the EnergieSORGLOS packages for electricity and gas, Allianz Partners will provide protection in the future with integrated assistance and insurance services. If a job is lost because of an accident, illness or the insolvency of the employer, Allianz Partners will take over the installment payments for electricity and gas. In addition, rehabilitation costs as a result of an accident or serious illness will be covered. Depending on the option chosen, the compensation payment is 300 or 600 euros

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Alma Ribanovic

Group Practice Leader Affinity

T: +43 50404 180

Alma Ribanovic strengthens GrECo Group

Leading expert for affinity solutions takes over development of the division in Austria and Eastern Europe

The GrECo Group, the leading risk and insurance consultant in Eastern Europe, is increasing its focus on special solutions and is setting up a dedicated Affinity Practice Group. Alma Ribanovic (37) takes over the new established position of Group Practice Leader with immediate effect. Alma Ribanovic is regarded as one of the leading specialists in affinity solutions and most recently worked for UNIQA, where she headed the Affinity division.

Affinity as B2B2C business stands for smart and convenient insurance solutions. As a new business model it is a direct response to the disruption and changes on the insurance market – it proactively tackles customer revolution and brings digitalization to the spotlight.

With the new Practice Group, Alma Ribanovic will strengthen the existing activities enabling GrECo to provide additional value to the companies by helping them differentiate from competition, attract new and retain existing customers and increase customer loyalty.
Alma Ribanovic comments „There is already a market for affinity solutions and interest is growing. The advantages are attractive and cannot be denied. Affinity is nothing new, but this market segment is currently growing rapidly. With a group-wide affinity practice, GrECo is well positioned to capture market share and become one of the leading risk consultants in this field”.

Alma Ribanovic

Group Practice Leader Affinity

T: +43 50404 180

Image by Gerd Altmann from Pixabay

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