PARAMETRIC AND SMART INSURANCE FOR DURUM WHEAT AND GRAPEVINE

The piloting of parametric and smart policies for the agribusiness sector, conducted by Cetif in collaboration with Barilla, Con.cer and Horta as part of the European PLOUTOS Project, is in its final stages.

PLOUTOS is part of the European Horizon 2020 initiative and involves 30 companies operating in the agribusiness sector and 3 universities in 7 European countries.

The maingoal of the Project is to rebalance the agribusiness value chain to make it more environmentally and socially sustainable.

Within the Project, Italy is leading the way in experimenting with innovative policies to help address the issue of underinsurance in the Italian agricultural sector. According to ISMEA data, as of 2021, about 6 percent of farms have crop insurance coverage, with a total of 10 percent of agricultural land insured. Insurance cover, then, highly concentrated in the north, with about 80 percent of contracting farms coming from this area.

The novelty of the project lies in theuse of technology and data collected from precision agriculture, and therefore solid and quality data, to be able to offer a policy that combines the functional features of a parametric with the characteristics of a fully digitally contracted policy. The result is a policy that is quick and easy to underwrite, and also able to deliver claims near real-time thanks to data certified by Horta's DSS. In addition, the information systematically entered by farmers into the DSS is maximized to provide a service to support farmers.

Within the project, experimental policies are being tested on durum wheat and vines, and are declined on different types of damage: in Sustainable Innovation Pilot 2 (the trial dedicated to durum wheat), the parametric policy aims to improve Barilla's supply chain contracts and protect farmers on quali-quantitative yield loss resulting from adverse weather conditions. In this context, 30 farms in Puglia were involved in the trial. In Sustainable Innovation Pilot 10 (the trial dedicated to grapevine), the parametric policy aims to protect grape growers implementing sustainable farming practices from damage caused by plant diseases. Seven farmers are involved, all belonging to the Piacenza area.

In addition, as a result of the dialogues with the authorities held in 2022, changes proposed by Cetif have been included in the new text of the Agricultural Risk Management Plan (RMP) 2023 so that the parametric and smart policies developed during the experimentation can fall under the category of experimental index-based policies and consequently become subsidized policies. This is a very important step for the trial given also the promising business potential. The market for subsidized policies, in fact, grew by 86 percent in terms of premiums paid in the period 2011-2021 for a total (as of 2021) of 6.5 billion euros in insured values. Numbers that denote a market that is still contained, but booming.

The experimentation is in its final stages, and in September, conclusions will be drawn on the developments and innovations implemented in the last two years of the project. At present, the project has already succeeded in demonstrating how the time is ripe for the introduction of digital innovations in the agribusiness sector as well. It has also shown that the digitization of agricultural insurance can open up new business opportunities and foster the development of customized services and solutions for producers. Finally, the experience gained during the experimentation of parametric and smart policies in the context of the PLOUTOS Project will be of paramount importance in guiding future developments and improvements in the agricultural insurance sector. The collaboration between Cetif, Barilla, Con.cer and Horta has shown how the combination of skills and resources can lead to significant and promising results.

Edited by the team Cetif Research