What is the background of Santam Crop Insurance?
Crop insurance in South Africa started in 1929 when a group of farmers in the eastern Free State formed a pool scheme to insure themselves against hail damage.
The scheme has taken many forms since then, leading to the founding of Sentraoes in 1970. Commercial Union Agricultural Services entered the market shortly thereafter, and the two merged in 2000 to form Agri Risk Specialists, which was underwritten by Santam.
Santam bought out the other shareholders in 2003 and rebranded the business unit as Santam Agriculture in 2007.
How competitive is the crop insurance market?
Santam Agriculture is one of six crop insurers in the country and has a market share of more than 50%. One of our greatest competitive advantages is that we have more than 90 years’ experience in crop insurance and have data going back to when crop insurance was launched in South Africa.
How has the need for crop insurance changed over the years?
It’s difficult to quantify the number of farmers who buy crop insurance, as this fluctuates due to the arrival of new farmers, but also because of small farms being bought out by larger farmers. We therefore look at the areas covered by crop insurance in relation to the areas planted to determine take-up. This has remained relatively stable at about 40% for many years.
What are the reasons for this?
Farmers have a wide choice of how to diversify their risks and manage their risk management costs.
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