Farmers Edge announced late April that it would offer Canada’a first canola heat blast yield protection product to its customers. The company will digitize the flow of insurance data from start to finish, and Munich Re will underwrite the contract.
Heat blast happens when temperatures rise above 28 °C during the day, and above 16 °C at night, according to the company. The heat level disrupts a canola crop’s growth cycle, particularly during flowering, impacting yield at harvest.
“We’re really focused on working with reinsurers to utilize this field-centric weather information and farmer’s data to develop new insurance products,” says Wade Barnes co-founder and CEO of Farmers Edge. “Heat blast in canola is sort of the first one — there’s going to be others coming down the pipeline, but we’re excited about heat blast.”
There’s no real measurement of yield lost by a person in-field, it’s based on temperature measurements from an in-field sensor. Once it hits the temperature, the sensor will trigger the claim, and Munich Re will go in and make the payment directly to the grower.
Barnes says other reinsurance companies have offered this type of product globally, but have based the data off government weather stations, as opposed to the in-field sensors.
“The problem with derivatives, is that sometimes you get paid when you shouldn’t and sometimes you don’t get paid when you should, and I think we’ve solved that problem by utilizing the farmer’s own weather information,” says Barnes.
Hear the full conversation between Barnes and RealAg Radio host Shaun Haney on using technology more in the insurance space, story continues below:
Going forward, Farmers Edge will be exploring other perils that hit the crop that can be measured in the same way — moisture is one example, as well as the thought process behind yield-guarding type products.
For 2021, the insurance product will only be offered to Farmers Edge customers on the Smart Solution plan, which has the weather component. Barnes says that products for other crops will be offered in the future — silking stage in corn, a dry period’s affect on soybeans, and heat in wheat are all being considered.
After the product has grown some legs, the possibilities for insurance product options are opened up for farmers and will be “tilted in their favour” says Barnes.