International Conference on Inclusive Insurance 2022
Field Trip

5 November 2022 – Renate Bleich, Chair, Munich Re Foundation

Around 50 participants of the International Conference on Inclusive Insurance 2022 were invited to attend a field trip to learn about an inclusive insurance programme in Jamaica’s agriculture sector. The field trip was organised by GK General Insurance, the insurance arm of the GraceKennedy Group. 

GraceKennedy is a corporation with a large range of food services and financial services. It is one of the largest single-entity food manufacturers in the Caribbean. Locally grown fruits and vegetables are processed and packaged here and either sold through the group-owned supermarket chain Hi-Lo or exported. The field trip took us to St. Elizabeth parish in the southwest of Jamaica, an area known as the “food basket of the island”. The production of root crops, vegetables and fruit plays a major role, next to sugar plantations and livestock production. Production is both for local consumption and for the export market. We visited a working farm and agricultural processing facility in Hounslow, which is operated by GraceKennedy Agro Processors (GAP). 

The company operates in an “Agro Park” model. At the Hounslow facility, the GAP leases 110 acres of land which is subleased to 12 farmers cultivating the plots. Roughly 150 farmers, mostly contract farmers, form a wider network selling their produce to GAP for processing in the facilities. GAP in turn provides support services for the farmers, including help with soil analysis, use of pesticides, disease management, irrigation, regenerative agricultural practices and the use of technology. “Our support services allow the farmers to run their farm as a business”, says GAP’s plant manager.

From manual labour to technology

A guided tour around the facilities showed how much manual labour is still necessary to process Scotch bonnet peppers and callaloo – a type of spinach plant. Moving on to the fields, a demonstration of an automated spray drone showed how technology can save resources. These drones can be used to apply pesticides or water, which reduces the amount of chemicals used by around two-thirds. Additional drones, which have already been ordered, will be able to identify pests with high-resolution cameras and hence reduce response times, possible outbreaks and the use of chemicals.

GAP’s support for farmers also includes risk management for property loss or damage due to extreme weather conditions such as excess rain, drought and extreme wind speed. If hit by these conditions, especially in the early stages of the agricultural cycle, losses can be substantial and farmers need financial help. As Jordan Tait, Assistant General Manager Commercial Lines at GK Insurance, puts it: “The biggest concern of our farmers is to restart quickly after disaster. Insurance enables that.”

Insurance waiting for the microinsurance regulation to scale

The microinsurance product “GK Weather Protect”, which GK Insurance launched in 2021 in collaboration with the Ministry of Agriculture, aims at protecting farmers and fisherfolk against the risks of extreme weather events. It is a parametric insurance and payout is triggered by pre-defined levels of rainfall, length of dry periods or wind speeds. GK Insurance has defined six trigger zones in Jamaica to be able to monitor triggers very accurately using public atmospheric data. In the case of a trigger event, claims payments are initiated automatically and payout is swift. As with any microinsurance product, premiums are comparably small, with premiums of 10–12 US dollars for hurricane winds and 30 dollars for extreme rainfall or drought, for a sum insured of 3,000 dollars. It is offered in the two seasons when the country is more prone to severe weather, namely April to June, and August to November.

However, microinsurance for smallholder farmers in Jamaica is still in its nascent phase. Although premiums were paid in full by the government to support uptake in the beginning, only about 1,000 farmers island-wide have purchased GK Weather Protect cover so far. With a total of 200,000 farmers on record, there is still huge potential to increase the level of protection. Major problems that need to be overcome include a lack of financial literacy and a lack of trust on the side of the farmers.

GK Insurance proved to be ahead of the game with this product as they developed it even though comprehensive microinsurance regulation is not in place in Jamaica as yet. “Only GK pursued microinsurance when the regulator called on insurers”, said Orville Johnson, Executive Director at the Insurance Association of Jamaica. He is confident that when microinsurance regulation is passed, hopefully in 2023, the sector will develop quickly to protect a growing number of smallholder farmers against adverse weather events.