Tough socioeconomic issues are impacting traditional farm and ranch and agribusiness operations, while shifting farming trends, new technologies like drones and novel business models like “agritainment” promise to drastically alter the face of the market, as Atul Kulkarni, Global Head of Farm & Ranch at AGCS, explains.
Allianz is expanding its Farm & Ranch and Agribusiness product globally. Describe the business.
Atul Kulkarni: Farm & Ranch is part of the MidCorp line of business (also known as Mid-Corporate or Middle Market Commercial). The appetite is chiefly small to mid-sized farms. Allianz has written specialized coverage for farms and agribusiness in the US for over 150 years. We are expanding globally where we already have a foothold and are also pursuing new market opportunities. For instance, we are broadening our appetite to include agribusiness operations like wineries and “agritainment,” which is an emerging class of business where farmers invite the public onto their premises for pick-your-own fruit, petting zoos, hay rides, corn mazes, pumpkin patches, seasonal and fall festivals etc. While we have historically insured winery operations primarily in and around the Napa Valley and Sonoma, California, recently we have transferred that expertise to the South Africa market. We are also broadening our appetite as far as target account size from hobby farms and smaller farms to larger agribusiness operations. This small and large segment expertise makes us a formidable competitor across the US and around the world.
What trends impact the Farm & Ranch and Agribusiness segments globally?
Atul Kulkarni: Many trends are impacting the business. For example, climate issues continue to impact farms and wineries around the world. Current market conditions in California can be traced to the recent drought, for example. Farm land is dwindling. Farmers feel financial pressure from lower crop production, decreases in land prices and increases in costs of water. Wineries are also globally affected by the warming climate. Certain markets that were too cold to produce decent wine before are now booming (Midwest US, New York, Virginia, Canada). On the emerging trends front, there is tremendous interest by farmers and ranchers in drone technology to survey fields. We will tap Allianz Aviation expertise as we explore possible coverage considerations, giving us a definite competitive edge in the global Farm & Ranch space.
How do current global economic conditions affect the Farm & Ranch business?
Atul Kulkarni: Economic developments heavily impact the Farm & Ranch business, both in the US where our product is more established and certainly globally where we are looking to expand. US crop exports are under tremendous pressure because of the strengthening US dollar, and pressures by global agribusinesses are putting small, family-owned farms under economic duress. In terms of market trends, local food (“farm-to-fork”) movements continue to affect global food distribution patterns as consumers become interested in locally-sourced ingredients. With the rise in online information and in disposable incomes, organic and non-genetically modified organisms (GMO) buying trends also continue to rise in popularity. Allianz must carefully follow these global trends so that we are best positioned to offer the best advice and solutions to our clients.
What are some of the competitive advantages Allianz’s farm and ranch product offers?
Atul Kulkarni: A robust suite of coverages coupled with expertise (underwriting, loss control and claims) make Allianz a strong insurance solution. Our competitors are local, regional and mutual insurers for smaller farms and hobby farms, but we offer higher limits on farm dwellings and a greater footprint than more regional players. On larger accounts, where we compete against more specialist Farm & Ranch insurers, we have the ability to write across borders—for instance, if a farm operation in North Dakota has exposures in Canada we can partner with the local AGCS office to write the deal. Our risk services also give us a strong advantage for small, mid-sized, large and complex accounts.
This article is taken from the next issue of the AGCS magazine Global Risk Dialogue, which is published twice a year. The next issue will be published in May.
You can find access to our global Farm & Ranch product line here.