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Artificial Intelligence in Crop Insurance for africa

17% of the world’s pastures and arable land belongs to Africa, despite the continent only receiving 0.7% of the world’s agricultural insurance. In Africa’s labor force, 60% of individuals work in the agricultural sector. Reducing risk via insurance has subsequent benefits beyond the act of risk management itself: insured farmers are more likely to receive credit and invest in tools and resources to advance their practices.

Specializing in one crop is a path out of poverty, but it fixates risk on one activity. Insurance can alleviate this issue, allowing for farmers to take more risks, be more innovative, and have greater access to financing in addition to their increased incomes. Crop insurance also lessens food insecurity in Africa. In the wake of climate change’s unpredictable weather events and temperature variation, insurance can prove valuable to African farmers. In 2018, droughts across Malawi, Rwanda, Tanzania, and Zambia negatively impacted harvests and farmers struggled to stay afloat. Cameroon is expected to suffer economic losses of USD 4.65 billion if there is a 14% fall in precipitation. Hence, agricultural insurance could play a significant role in increasing the social welfare of African farmers.

Despite potential benefits, the market for agricultural insurance has struggled to succeed in Africa, regardless of many efforts to sell this product. Many low-resource, smallholder farmers are often unaware that they’ve purchased insurance via bundled loans. Also, many of these farmers aren’t able to purchase insurance because they grow a variety of crops while many insurance plans only cover single crops. The reluctance to purchase insurance stems from a significant mass of farmers failing to produce enough food to support themselves. Thus, they are unable to afford premiums. Unfortunately, these are likely the people who would benefit most from insurance. There are various suggestions of government interventions to increase demand and adoption of insurance, including subsidization and crop insurance education.

In addition to low demand for crop insurance, a lack of good quality data contributes to the low uptake of this financial protection. Artificial intelligence can bridge this gap. To succeed, agricultural insurance firms need to have accurate and up-to-date information. AI revolutionizes access to and accuracy of farm data. Better information allows insurers to plan to achieve their own goals and reach or maintain solvency, possibly by providing financially-tailored insurance products. South African AgTech startup, Mobbisurance, offers insurance based on data collected from NASA and European Space Agency satellites. Smallholder farmers can sign up for this service through a smartphone. When satellites detect crop stress, like limited rainfall, a payout is automatically deposited to the farmer.

Utilizing artificial intelligence has been proven useful in agricultural insurance, but greater adoption by farmers is still needed. It’s important to create governmental policies and programs that can facilitate an environment where farmers understand and trust insurance, thereby reaping the benefits. Beyond improving crop insurance, artificial intelligence continues to demonstrate benefits to Africa’s agricultural sector. In our next blog post, we’ll talk about other applications of artificial intelligence in African agriculture.


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